Buy This, Not That: Putting Two Giant Phone Makers on the Line

Shah Gilani|September 11, 2024

Nearly 4 million people tuned in to watch Apple’s “Glowtime” event on Monday.

But while folks endlessly analyze what the company did – and did not – reveal… I’m more interested in what its products will do for the bottom line.

After all, Apple’s not the only phone maker in town. The company may be top dog in the U.S… but around the world, Samsung dials up a larger market share.

But only one makes it onto my Buy list.

See which phone maker deserves the call in the latest edition of Buy This, Not That.

Click here or on the thumbnail below to dive in.

TRANSCRIPT

Hey everybody, Shah Gilani here with your weekly BTNT, as in Buy This, Not That.

Apple (AAPL) versus Samsung (005930. KS). Two great companies.

But guess what?

Apple, hands down.

I wouldn’t buy Samsung. Samsung has underperformed the market.

Samsung is a huge company, but its profit margin is 13.13%.

Its trailing 12-month quarterly revenue growth is negative, down 22%. Its trailing 12-month quarterly earnings growth is down 80%-plus.

The stock is not performing well, either.

It’s making new lows, heading into 52-week lows. It’s not attractive at all.

Yes, it looks cheap in terms of trailing P/E at 16 and forward P/E at 7.94.

But good luck with that.

I don’t want to try and catch a falling knife in terms of Samsung.

Over 52 weeks, it’s down 5.5%. Apple is up 26% over 52 weeks.

The new iPhones are coming out. Are they exciting?

I don’t think they are. I don’t think there’s a whole lot going on. Yes, there’ll be more AI incorporation soon enough, but it’s not that big of a deal as far as this new cycle goes for me.

So I’m not a huge fan of Apple’s phones. I’m certainly not going to buy a new iPhone.

But as a $3.5 trillion market cap company, Apple keeps growing. And it’s huge. Again, Samsung’s at a 13.13% profit margin. Apple’s is 26.44%.

Over the trailing 12 months, quarterly revenue growth is 4.9%. Just shy of 5%.

Quarterly earnings growth over the trailing 12 months is 7.9%… we’ll call it 8%.

The stock is a little expensive at 33 times earnings, but you’re getting the earnings. So it’s okay to pay a higher multiple when you’re getting the earnings that you are willingly paying for. (Or gradually paying for.)

After all… You get paid because the earnings are increasing.

Apple’s cash flow is tremendous. I wouldn’t worry about it having to pay $14 billion to the Irish government for taxes.

Who cares? They’re sitting on almost $62 billion in cash.

So as far as Buy This, Not That… buy Apple, not Samsung. As far as phones, take a look at Samsung.

Catch you guys next week. Cheers.