Wondered Why Apple Doesn't Trade At A Premium? Here's The Answer

Even though Apple Inc. AAPL is hugely successful and has been growing its profits consistently over the last few year, most investors wonder why its stock continues to trade at a discount when compared to other tech and electronics majors.

Kevin O’Leary was recently on CNBC to answer that question and to discuss why he isn’t ‘Overweight’ on Apple’s stock.

“In terms of why Apple doesn’t trade at a premium to market multiples because investors ask themselves this question every day, am I getting myself involved in a consumer electronics where I know the outcome over a long period of time,” O’Leary said. “Is it a Sony, is it a Motorola, is it a Nokia or is it something completely different? And we don’t know the outcome of this because the more you see commoditization of handsets and soon to be launched watches; Apple’s unique environment may or may not allow to hold its margins.”

He continued, “So, when people say to me why don’t you think this is trading at a [27] premium because it’s growing so well even though it’s so large, that’s the reason. I have seen this movie before, now these stories in China are going to be hugely successful, just as they were in State side, I think they are more of the same and hopefully it’ll continue to spur growth, but that nagging concern about consumer electronics and their story is what keeps investors like me not overweight in this position. I own this stock, but I am not over weight it.”