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Goldman Sachs’ Apple Downgrade Is Perfect Buy Signal: Henssler’s Parrish


It is the biggest, fastest-growing market on earth for consumer goods, but China is also still one of the few places where large foreign companies can wake up one morning and find themselves expelled from doing business there. And it's exactly why Apple (AAPL), after two weeks of being hounded in the local press about customer service and warranties, finally caved in and offered a public apology to the people of its second most important market.

"I don't like the notion of bowing down to anyone because Steve Jobs wouldn't have even responded," says Ted Parrish, director of investments at Henssler Financial. "I think it was a mistake (for CEO Tim Cook) to do that," he says in the attached video, adding that "you need to manage the company the way you've been managing it and the earnings will take care of the stock price."

Speaking of which, had shares of Apple not just shed 40% in the past 6 months, Cook probably wouldn't have made the move either. But times are different today, and the stakes for succeeding in the world's 2nd largest economy are higher than ever. While some have argued that, aside from a little face, the cost of apologizing and reiterating existing warranties was nothing, and therefore, the company should have moved quicker to resolve the crisis.

At the same time, the Cupertino, California computer giant is facing a different battle on the home front, where Goldman Sachs has just removed it from its elite Conviction Buy List and slashed its price target to $575 from $660 previously.

"The news out of Goldman today, in my opinion, is a perfect buy signal on Apple," say Parrish, adding that with a price-to-earnings ratio of 9, a dividend yield of nearly 3%, a business that is still growing by 17%, and a product cycle that is still strong, "I think you've got to own Apple now."

As he sees it, Apple is "just out of favor now," and is finally facing a comeuppance he says he knew was going to happen. Even so, Parrish has no intention of disposing of his shares.

"In the context of a diversified portfolio I believe all investors should own shares of Apple," he says.