Guess Who’s Buying Apple

Doug Kass may be popular as an Apple (NASDAQ:AAPL) bear, but with the company’s stock in decline, the Seabreeze Partners analyst is ready to buy. Kass wrote in a research note in Real Money that Apple’s shares had taken in enough pessimism about the looming fiscal cliff and a low growth rate prediction to present a real buying opportunity.

“A discounted dividend model implies that the future growth rate in profits at Apple will be only about 5 percent,” Kass wrote. “This is too low — Apple’s share price decline has likely now overly discounted most (if not all) of my concerns.”

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The analyst added that he was also “less concerned” about a global economic slowdown. In addition, shareholders and potential investors were being more realistic. “Investors are no longer smug and have grown increasingly (and arguably fully) aware of the challenges of the delivery of current and future new products,” Kass wrote. “Apple’s shares are no longer the beneficiary of fund flows — just the opposite has been occurring, which has materially pressured the shares down to attractive levels.”

The analyst has often expressed his concerns about the excitement surrounding the tech company, and his last assessment in October came when Apple was trading above $600. Kass said then that investors would have to closely watch the company’s product upgrade cycle as well as monitor its ability to deliver software and hardware with few flaws. Kass also pointed out questions of cost and margin trends as well as Apple’s many growing rivalries.

According to Kass, the expectations of a “wow” product from the company, such as a market-disrupting television set, have now almost evaporated for the time. “At current prices, the next ‘wow’ product has been discounted away, and the company’s completely refreshed product line (no mean feat in such a short time frame, and if supply comes in line, CEO Tim Cook’s main goal for 2013) should be plenty enough new stuff to once again propel earnings throughout 2013,” he wrote.

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