By Quentin Fottrell
It seems hard to believe, but an iPad now costs roughly the same as one bite — or share — of Apple stock. So which is a better buy?
Shares in the technology giant recently surpassed $500 – about the same price as a new iPad. Most analysts expect Apple’s stock to keep climbing, but disagree on how high. Goldman Sachs has a $600 target on Apple (the price of a 32GB Wi-F-only iPad 2), while Morningstar analyst Michael Holt says the company’s fair value is $565. “There’s more room to run, but certainly it’s not the same margin of safety we would have seen a few months ago,” says Holt.
Given those estimates, many pros recommend buying shares. They point out that Apple has a cash stockpile of $98 billion, and lots of choices how to spend it. One option, according to the Goldman Sachs note, is to pay out a dividend to Apple shareholders. Another choice: Apple could develop a new device that’s smaller and cheaper than the iPad, but have more wizardry.
Even fans of Apple’s gadgets point out that with the company plans to start selling the iPad 3 March 16, it may make little sense to drop $499 on a soon-to-be outdated iPad 2. “If you buy stock now, in three years time you could buy two iPads,” says Scott Sutherland, analyst at Wedbush Securities, meaning the stock will likely double.
Of course, there are those who prefer the iPad 2 to shares, especially with used models selling for as much as 20% off new ones, or $420, online. “Sell at least part of your Apple stock and buy one. I don’t believe the news can get any better,” says Jeff Saut, chief investment at financial advisory firm Raymond James in St. Petersburg, Fla.
And then there are those who can’t resist buying both. “I’m an Apple stock guy,” says Scott Davis, chief growth officer at marketing consultancy Prophet. “You have the most valuable company in the world, the most valuable brand in the world,” says Davis, who owns an iPhone, iPad, iPod, Apple TV and — after 25 years with IBM — recently swapped his PC for a Mac.