Editor’s note: This article was first published in September 2013. Apple’s 450–550 dollar share prices predate its 7-for-1 (2014) and 4-for-1 (2020) stock splits, so they cannot be compared with current quotes, and the low-cost iPhone and the pending China Mobile deal were 2013 news. These stock picks and price targets date from September 2013 and are kept as a historical record. They are not investment advice.
Solid stocks with recurring profits that have already come through the last two crises without too many ups and downs.
That is what a conservative investor needs, and if they also pay good dividends, so much the better. For investors with large amounts of capital who want to diversify their portfolio with US stocks, our consensus recommendations would be the following:
1. Apple (AAPL)
If we set aside the speculative battle the media have been waging these days since the iPhone launch, we are left with the same old idea: Apple is one of the most solid companies there is, and it will keep growing its business. Perhaps not at the pace it has accustomed us to (which by now is impossible), but it is a stock that tends to rise in price over the long term. The question is not whether Apple will get back to 700 dollars or not, or whether it will finally close the deal with China Mobile, because even without a China Mobile deal Apple will keep growing in Asia.
Some think Apple is falling because the low-cost iPhone is not cheap enough to compete in emerging markets, when the truth is that it was going to fall anyway: had it been too cheap, speculators would have said that Apple had tarnished the image of Steve Jobs’s company, or that the margin on such a cheap product would not make it any profit.
It is precisely these speculative moves that have given us a buying opportunity in the 450-460 dollar range. Some research firms have cut their price target for Apple without good reason. Apple at 450 dollars is a bargain. It may go down or it may go up, but 550 at least will be reached sooner rather than later. What’s more, some rumours say that the China Mobile deal could be closer than we think. Apple is a company that every conservative investor should add to their portfolio at a good price.
2. Microsoft (MSFT)
What we like about Microsoft is probably what is still to come. Judging by some of the company’s moves, everything suggests it is preparing different strategies to diversify its competitiveness into other, perhaps less exploited, fields. Even so, like Apple, it is a company that will tend to grow to a greater or lesser extent. Of course, the ideal would have been to add it to your portfolio during the big fall of 2008, but… now it remains a value investment.
3. Intel (INTC)
The chipmaker could surprise in the medium and long term. Buy recommendations on the stock have already started, the first of them with a price target of 28 dollars a share. Given the negotiations and possible deals it could close, we do not rule out Intel reaching, in the long term, share prices similar to those before the dot-com crash (60 dollars). Right now its business is solid and growing.
Featured image: Coolcaesar, CC BY-SA 4.0, via Wikimedia Commons.
