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The Company Behind Apple That Investors Should Own


Sure, there are the Apple product assemblers, but the company that figures out what happens behind the glass is the one to buy.

Investors in Apple (AAPL) have indeed made a fortune over the past several years. In fact, over the past decade the return has been some 4,243%. For those that got on board and stayed on board -- congratulations.

I say congratulations because it's very tough to invest in a company like this. For in the beginning, there's plenty of scariness. Products in the pipeline are hard to define, and who knows how they might play out in the market.

Then, as the company garners all of the attention of both Wall Street and Main Street, shares head to the stratosphere of valuations. Then the question becomes how to value such a company and its shares.

As a company like this is trading at multiples of assets and sales, and really is only as good as its next new thing, how are you to expect it to keep topping itself quarter after quarter?

Success then becomes a game of nerves-will the market keep liking the stock, or will it suddenly become the target of choice for the short-sellers?

So, again, congratulations for those who made it for the past decade. Now take your money and run!

Behind the Glass Screen
The former CEO of Apple was a marketing genius. Plenty has been written about Steve Jobs' accomplishments, and shareholders know this best of all.

But as the world saw this month, when the genius isn't involved, there seems to be a bit of a vacuum. The flagship product roll-out was met with a global muttering of "ho-hum."

Sure, there will be some sales of the new phone products. And sure, folks will keep buying the rest of the product lines, and continue to be locked into the online content shop. But it's hard to see where the next new thing will come from within the existing known talent pool of the company.

Moreover, the interesting thing about all of the past whiz-bang gizmos of the company is that while the packaging and marketing might have been genius, few of them would have been possible without the innovations and production coming out of Suwon, Korea.

And if you've been following along with my calls on stocks for the past same decade, you've been cashing in on the company behind the shiny new glass screens in Apple products: Samsung Electronics.

Sure, there are the assemblers -- including Foxconn, née Hon Hai -- but the company that figures out how the stuff happens behind the glass is Samsung. And for the past decade, the shares have generated a return of some 500%.

Not as stellar as 4,234%, but 500% is good.

Moreover, even after gaining some five times, the stock is still a bargain, trading for less than its trailing sales-not multiples of sales.

The sales of all of those high-end chips that make everything appear on the glass screens (including the screens themselves) along with countless other products for both its own high-quality products as well as for those of Sony (SNE), HTC and others, puts annual sales gains for the company at over 25%.

Not that the market hasn't completely noticed this. The shares have continued to perform over the past year.

In fact, despite the recent few weeks' stock market mess, the trailing year's performance of Samsung has been more than 14.1%. And even with the US dollar gains of late, the net return for US investors is still a very healthy 8%-plus gain.

Leave the apple and go for the tree -- consider buying Samsung under $850 a share.

New! The TechStrat Report by Sean Udall. Sean provides in-depth analysis, strategies and trades across the technology sector. Take a FREE 14 day trial.

Editor's Note: This article was written by Neil George of The Pay Me Strategy.


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No positions in stocks mentioned.
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