Apple (AAPL) pushed back above $500 a share briefly in the last week or so, once again proving DoubleLine Capital’s Jeffrey Gundlach right on AAPL stock.
Gundlach was one of the few bears who predicted the flop of Apple stock from $700 to $400, and then in May and June actually bought Apple stock with anticipation of it rising back into the $500 range.
So what does Gundlach says is next for AAPL?
Well, in a recent CNBC interview he said that Apple stock is “dead money” and won’t move much higher. The ceiling, he said, is $530 on AAPL.
This Apple call puts Gundlach at odds with another big name on Wall Street, Carl Icahn.
In mid-August, just a word from Icahn (well, a Tweet, really) pushed Apple stock to new highs. Carl Icahn called AAPL stock “undervalued” and told his followers on Twitter that he had a “large position” in Apple stock.
This is going to be an interesting battle of Wall Street titans, especially considering Carl Icahn’s success earlier this year going head-to-head with Ackman and Pershing Square on Herbalife (HLF).
Apple Stock Isn’t So Bad
Despite volatility in Apple stock and the real fears of a short-term ceiling, my two cents is it’s hard to argue that shares truly are at risk long-term. “Dead money” is a strong way to label a stable tech titan with a 2.5% dividend yield at current valuations.
I think the only way AAPL will wind up burning investors is if the market continues to move significantly higher and this tech stock continues to underperform … something that, frankly, isn’t likely after front-loaded returns in 2013 and a murky macro outlook because of the conflict in Syria, risk of Fed tightening, a cooling in housing and other issues.
Yes, AAPL margins are under pressure as the older models of iPhones and iPads sell for cheaper, and that might only accelerate as plans for a cheap iPhone have been hinted at all year. And yes, Apple is far from untouchable as Samsung (SSNLF) takes market share in both handsets and tablets, and as competitors like Amazon (AMZN) with its Kindle and Google (GOOG) with its Nexus 7 tablet and new Moto X smartphone are closing in on iPad’s turf.
But remember, Gundlach is not the same kind of investor that Carl Icahn is. There might indeed be short-term volatility ahead, but that doesn’t mean AAPL is stuck for the next decade.
Related Reading on AAPL
- More on Gundlach’s spot on AAPL. (Apple 2.0 via Fortune)
- Icahn likes Apple stock — you should, too. (The Slant)
- Will there be more plastic in the next iPhone to keep down costs? (ValueWalk)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.