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Spend $700 at Apple Store or on Apple Stock?


Back in February, when Apple’s stock hit $500 – the same price as an iPad — we asked which was the better buy.  Most experts said the company’s stock was headed higher – and they were proved right.

Investors who bought a single share of Apple (AAPL) back then would have earned $200. An iPad purchased in February, meanwhile, is now worth around $400 on the resale market.

Today, a share of Apple is worth about $700—enough to buy an iPad and an iPhone (with a two-year contract). Surely, we thought, the gadgets were now the better deal? But when we put the question back to the experts, many said that it still makes more sense to buy Apple stock than visit the Apple store.

Even with the stock at a record high, most have not lost faith in Apple’s growth story. “I would still buy Apple stock,” says Scott Sutherland, analyst at Wedbush Securities. Earlier this month, Sutherland raised his target on Apple to $885 from $800 to reflect the demand for an iPhone 5, a mini-iPad due sometime in December and Apple TV set expected in 2014. “I’d go for the Apple stock, as the iPad and the iPhone will be obsolete within 6-12 months,” says Damon Brown, author of several books on tech culture.

Shares in the technology giant touched $700 in after-hours trade Monday for the first time after the company said pre-orders for the iPhone 5 topped two million in just 24 hours. Analysts at Sterne Agee & Leach Inc. have since raised their target on Apple to $840 a share from $820, and Michael Walkley, an analyst with Canaccord Genuity, says he expects Apple to sell 10 million iPhones between now and Sept. 29.

Others are encouraged by Tim Cook’s performance as CEO. Apple has $100 billion in cash and, under Cook, paid a special dividend to investors. “The question of whether or not the business, brand and depth of innovation could continue at the same pace in a post-Steve Jobs era has unequivocally been answered yes,” says Scott M. Davis, chief growth officer at marketing consultancy Prophet.

Of course, there are some analysts who are bearish on Apple. Walter Piecyk, technology analyst with BTIG brokerage, has a neutral rating on the stock, arguing that the $199 subsidized price of the iPhone can’t be supported by wireless carriers indefinitely.

Others contend there is more joy to be derived from being an Apple buyer than an Apple investor. “I find Apple products much more user friendly than stock market products,” says Patchen Barss, author and technology consultant. “I will never be rich, but I will be happy.” Even Larry Rosen, author of “iDisorder: Understanding Our Obsession with Technology and Overcoming Its Hold on Us,” says his quality of life would be better with an iPad and iPhone 5. “It’s still all about the toys,” he says.



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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to quentin.fottrell@dowjones.com or tweet @SMPayDirt.