Apple (NASDAQ:AAPL), keeps a keen eye on its surroundings, competition, manufacturers and anything that can bring in more cash flow or stand as a barrier between the company and its success. Such observations become a necessity when you are a big player in the market. But sometimes you get stuck with an overwhelming number of options to choose from and it isn’t an easy task to evaluate pros and cons and cross out unnecessary alternatives. At times like these, everyone who is someone comes with suggestions and advices on what should be the next big move. Similar is the situation with Apple (NASDAQ:AAPL) now a days.
Carl Icahn, the big American businessman and investor is once again at Apple (NASDAQ:AAPL)’s back, asking it to consider its $133 billion in cash to repurchase its shares. Icahn owns 53 million shares of Apple (NASDAQ:AAPL), making him one of Apple (NASDAQ:AAPL)’s most important shareholders hence an important and prominent figure. Icahn believes that Apple (NASDAQ:AAPL) is one of the best investment options currently from a risk reward perspective. Looking at statistics Apple (NASDAQ:AAPL) surely isn’t the dynamite it was under Steve Jobs in terms of growth but it surely still is the biggest profitable company. Icahn’s theory is that this repurchase would force shares of the company up from $100 to over $200. According to him Apple (NASDAQ:AAPL)’s worth is at least $203 per share, which is roughly double the price at which it stands today. He has called the stock “undervalued”.
His argument is that Apple (NASDAQ:AAPL) doesn’t require additional cash or depending on its history is unlikely to purchase another company of equivalent size and value. Even if Apple (NASDAQ:AAPL) was going to consider any purchases, the best in the market are too expensive, e.g Google Inc’s (NASDAQ:GOOG) is worth $390 billion, market cap. Facebook (NASDAQ:FB) is of $201 billion and Amazon.com Inc (NASDAQ:AMZN) is $149 billion.
Even though many exist that are below the $100 billion mark like Goldman Sach Group Inc (NYSE:GS) at $86 billion, but an investment bank doesn’t do it for Apple (NASDAQ:AAPL). Altria Group Inc (NYSE:MO) is of $92 billion. But a cigarette business, regardless of its benefits comes with too many legal risks that Apple (NASDAQ:AAPL) doesn’t want to be attached to. Next in line is American Express Co (NYSE:AXP) might be a good pick to work with Apple (NASDAQ:AAPL)’s new Apple Pay online but $100 billion doesn’t seem to add value for money. Lastly is the Boeing Co (NYSE:BA) with a market cap of $91 billion, but the price of its products are much larger than Apple (NASDAQ:AAPL)’s.
At this point, the existing option, that is below $100 billion and seems viable is McDonald’s Corp (NYSE:MCD) set at market share of $92 billion.
Looking at the above figures and names, it seems like Icahn might be right about Apple (NASDAQ:AAPL) returning its cash to the shareholders. Apple (NASDAQ:AAPL)’s stock represent one of the best risk/ return tradeoffs.