Your Top Stock Pick—Apple

September 8, 2009

Last week, I asked you to send me an email to let me know which stock you’re most interested in right now. I received over a hundred emails with a wide variety of stocks that readers like you are curious about investing in, so thank you to everyone who wrote me.

As I combed through my inbox, one company kept popping up: Apple (AAPL). So in response to the host of writers who asked me about this trendy tech firm, today we’ll take a bite out of Apple to see what this stock is made of. Many thanks to Richard F., Santosh J., Michael B., Luke Y., Lydia L., Ted, Neal V., Drew, Roy R. and all the others who wrote in suggesting this pick. (Note: You can email me your suggestions for our next stock of the week at stocks@navelliergrowth.com)

Mac or Microsoft? Depends on Your Style

Apple has almost single-handedly redefined the consumer electronics market with innovative products—from changing the way we listen to music with the iPod to redefining the role of cell phones with the iPhone. But don’t think this company is all fun and games. Apple continues to make inroads into the computer market and erode the market share of fellow tech icon Microsoft (MSFT). The Mac vs. PC rivalry is more than just a cute ad war, but a real bottom-line issue.

I’m a big fan of those “Mac vs. PC” ads that are all over the place—and not just because they’re funny. It’s because I think they provide a glimpse into the corporate culture of each company. You see, Apple is at heart an inventive company looking to grow by creating the next big thing. On the other hand, Microsoft is an established giant that keeps doing what it has always done well… and then using the profits to purchase a smaller company’s ideas and leverage them to even bigger returns. Apple’s strategy is obviously much more glamorous and appeals to image-conscious consumers, however both of these strategies have merit.

In this installment of Stock of the Week, I’ll explain how these separate strategies have resulted in very different performance for each company’s stock—and which of these tech powerhouses is a better investment right now. Let’s dive in!

Apple (AAPL)                                                 Microsoft (MSFT)
Market Cap: $149.50 billion                        Market Cap: $145.42 billion
2Q Earnings: $1.35 per share                    2Q Earnings: $0.36 per share
2Q Surprise: +15.4%                                    2Q Surprise: +0.0%