Apple is soaring, but is Google a better buy?

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Source:   —  April 07, 2016, at 9:14 PM

Recollect when Alphabet, the parent company of Google, passed Apple to become the world'south most valuable company?.

Apple is soaring, but is Google a better buy?

Recollect when Alphabet, the parent company of Google, passed Apple to become the world'south most valuable company?

Yeah. Me neither.

Alphabet (GOOGL, Tech30) briefly inherited the biggest market cap crown in early February. But Apple (AAPL, Tech30) has since roared back to life, gaining about twenty percent since hitting its lows point for the year on February eleven.

Apple'south shares are up four percent year-to-date and the company is presently worth about $610 billion -- nearly $90 billion more than Alphabet.

So much for Alphabet beating Apple to the $1 trillion mark?

Perhaps. Both still have a long ways to go before they obtain there. Some analysts think there'south a excellent argument for each company to continue outperforming the rest of the tech sector and broader market.

Related: Apple could be radically redesigning the iPhone

Apple'south resurgence comes at an fascinating time for the company.

It'd been in the center of a privacy battle with the U. S. government over access to the iPhone used by one of the gunmen in December'south San Bernardino terrorist attack. But the FBI recently said it found a way into Syed Farook'south phone without Apple'south help.

Apple also recently released the iPhone SE -- its first four-inch model since the 5S came out in two thousand-thirteenth. (Haters of increasingly bigger smartphones rejoice!) And Apple may soon be able to claim that it's sold its billionth iPhone.

So Apple'south comeback makes sense. The stock was arguably way oversold due to concerns that iPhone sales were peaking.

But it'd be a error to underestimate Alphabet -- which I (and the analysts I quote) will still occasionally refer to as Google during the rest of this story. (Elderly habits die hard. Sorry, Larry Page!)

Colin Gillis, an analyst with BCG, said that Apple'south rebound is impressive. But it may imply that there'south small upside left in the stock at this point.

Related: Google Play removes app made by the Taliban

He argues that Google has a better track record with the higher profit edge software and services businesses than Apple, which he believes is still essentially a hardware play. So Apple is more dependent on upgrade cycles for its phones, tablets and Macs.

"If you could only purchase one stock, it'south Alphabet," Gillis said. "Longer-term, Google is still better positioned than Apple to construct its services and software businesses."

Gillis has a price target of $110 for Apple -- barely over its current price. His price target for Alphabet is $900 -- about twenty percent higher than where it's trading now.

But Ivan Feinseth, an analyst with Tigress Financial Partners, said he actually likes Apple a small more than Alphabet at these levels. However, he added that investors may not have to select one over the other. He thinks both see attractive.

"They're each excellent values. Alphabet has more going on because it'south more diversified." he said. "But both companies have a lot of cash to acquire things. And while Apple may be a one-trick pony with the iPhone, it'south a good pony."

Gillis agreed that rumors of the iPhone'south downfall were probably exaggerated.

"The SE is going to fill a kind hole. There is enthusiasm about the iPhone again. And people are looking forward to the iPhone seven later this year as well," Gillis said.

So even though Apple'south stock may have gotten a bit ahead of itself, you shouldn't count it out just yet either.

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