Portfolio Manager Jeffrey Cornell of Johnson Investment Counsel says his number-one favorite name in his portfolio is Apple Inc. (NASDAQ:AAPL), as he believes the company is undervalued.
It’s very cheap in our minds. We understand that moving from a hardware-, software-based company to something that’s dependent for two-thirds of sales and 80% of profit on iPhones changes the valuation parameters of that company, but the company in our mind is very cheap.
We believe the iPhones’ cycle’s probably bottomed. The company is sitting on $220 billion in cash, and even though a lot of that is overseas, they can do a lot of things with that money: increase dividend, do buybacks, make acquisitions. Their free cash flow is just gigantic, and we like that type of company.
We think Apple is probably worth about $140 a share, and it’s somewhere around $103, I believe, this morning. So it’s got quite a bit of upside in our minds.
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