Analyst Says Apple's Upside Potential Outweighs Risk By 4-To-1, AAPL Up 4%

by , 12:20 PM EDT, June 29th, 2001

Susan Byrne of Gabelli Westwood has issued positive comments on Apple today, helping to boost the stock in morning trading. Ms. Byrne was quoted by Morningstar.com as saying that Apple had a strong balance sheet and cited the company's inventory management and new product introduction as factors that make Apple a good buy. From the Morningstar.com report:

Westwood Management's investment process is guided by one important objective: Protecting our client's investment. We emphasize long-term capital growth with risk-control disciplines. Westwood believes that the most-attractive investments allow us to purchase growth at a discount while limiting risk to opportunity cost.

Our pick is Apple Computer, the designer, manufacturer, and marketer of personal computers and related personal-computing solutions to the educational, creative, consumer, and business customer. In 2000, Apple had been hurt by the slowdown in the overall personal-computer market and by missing some key product features on its computers. Throughout this period, Apple maintained a strong balance sheet. Expectations are very low for Apple given the widespread weakness in the personal-computer market, but the company has managed to work down inventories and introduce a number of new products.

We do not see the current slowdown in the personal-computer market as a sign of saturation in the United States and see demand picking up as excesses created by 2000's spending bulge are worked through. Apple currently has upside potential that outweighs the limited downside risk by a factor of four to one.

Apple stock is trading at 24.50, up 0.96 (+4.08%) in moderate volume as of this writing. The stock is trading at the day's high.

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