Core Equity Research

Core Equity Research
Contributor since: 2013
Company: Core Equity Research
There are so many stocks out there to long or short. It's my personal preference to write on the one's on which i dont have exposure.
Apple is the latest victim of “Law of Large Number” as their base is so enormous that it is virtually impossible for Apple to continue at same pace. But at that time technological advancement gets into play and Apple become pioneer in smartphones and taken advantage for years but now in Smartphones Apple is facing competition from Samsung, Which is evident from following number:
Samsung dominates the Smartphone market with a 29 percent share in Q4 2012, up from 22.5 percent a year ago. Apple comes second with a market share of 21.8 percent, compared to 23 percent a year ago. Samsung's Q4 2012 Smartphone sales totaled 64.5 million units, up 85.3 percent from the previous year, while Apple's sales reached 43.5 million sets, a 22.6 percent increase as compared to the last year.
So rapidly growing competitor in Smartphone is real concern for Apple, if Apple fails to bring some game changing products it will be hard for Apple to maintain its growth Rate due to increasing base. So for technological companies the product development is key to success, as Apple have done years ago by introducing Game Changing product like SmartPhone. So product innovation will be key for future growth of an Apple. I am not bearish at all on current Valuation of apple because due to increasing investors skepticism it is currently trading at a discount to its intrinsic value. But I have concerns regarding future growth rate which is highly dependent on product innovation.
Let me clarify one thing, on current valuation of Apple, I am not at all bearish especially after taking into account its cash position.
The main idea of this article is to elaborate that Samsung is less risky because it Provides investors with geographical as well as product diversification. Samsung derives 43% percent of its revenue from its mobile segment, while apple mobile segment stands at 48%. The distinction between them is the fact that Apple 48% of its total revenues are tied up with single product iPhone, which means that single flop model of iPhone can damage Apple a lot, while Samsung 43% of revenue is not linked with single product. In fact, they have a wide variety of phones, ranging from high-end Smart phones to low-end basic phones. Only in Smart phone series, they have numerous models, so their revenues are not tied up with single mobile model. Secondly, this 43% also includes their hardware sales which they are selling to other mobile manufacturers as their vendors. So they are in the “win win” situation. That’s why I believe that makes Samsung stock is less risky that apple, while at the same time it is also providing growth potential of rapid changing technology industry.
There are so many stocks out there to long or short. It's my personal preference to write on the one's I am not exposed to.