Investing in the Next Apple

October 22, 2014 - Finance
Investing in the Next Apple

For those that missed out on the recent burst of Apple’s (APPL) climb on the stock market, may find opportunity in Korean and Japan’s “cash-hoarding”, low-valued companies, based on Citi’s analysts. Over the past month, the market capitalization for Apple surpassed $600 billion once again. The Apple brand was able to return to its title as being the most valuable company in the world, after falling in the past and gaining $300 billion for the last two years. 

Currently, Apple’s shares are trading for approximately $102. There has been an 85% growth, since its nadir during April 2013. On Thursday evening, Citi’s equity strategists said the activist opportunity for Apple is obvious with hindsight. Now, many are trying to determine where the next opportunity may lie. Are there low rated companies that hoard cash also and may possibly be persuaded into giving some to its shareholders? Citi has suggested that an investor focus on companies that share the same presence that Apple had a little over a year ago, which includes a cash pile and cheap valuations that the management may part with after some persuasion. 

When it comes to similar valuations that Apple experienced a year ago, Japanese and Korean companies are featured strongly. The companies in these areas may be encouraged to increase their payouts, after a change in legislation. Below are some global companies that have the potential to become a “new Apple”. 

  • Fuji Heavy Industries (7270.T-JP on the Tokyo Stock Exchange)
  • Hankook Tire (24-KR on the Korea Stock Exchange)
  • Gazprom (SBNF-MZ on Moscow’s Interbank Currency Exchange)
  • Samsung Electronics (593-KR on the Korea Stock Exchange)
  • LG Display (3422-KR on the Korea Stock Exchange)

A key note is that Samsung Electronics has had the number of activist investors from the U.S. constantly increase on their shareholder list. At the same time, the company has had an 11% yield of surplus free cash flow that is similar to what Apple experienced 16 months ago.