Apple announces 1st quarter earnings tomorrow (4/23/2014) and if history repeats itself, the stock will sell off in after hours trading and follow through lower on Thursday. There will be nothing to “wow” investors in the earnings or next quarter’s projections and that will be enough for a continuation of the bear view that Apple has nothing new to bring to the table.
Investors have become a very impatient breed in the last 15 years. They want results now and not later. They, for the most part, are unwilling to wait for results as they feel they should be investing to make money today and NOT tomorrow. Everything in our society mirrors this attitude that we want things now and not at some later date. Its a disease that is bringing our society down. But I digress….
For patient investors, Apple is a screaming buy. It has the cash to guarantee a steady dividend that currently pays 2.3% (look for it to be raised slightly tomorrow) and a P/E that is well below its peers. Apple has the most loyal customer base of just about any company on the planet and those customers translate into sales all other competitors envy.
So, what’s the problem and why has the stock underperformed making it so cheap?
A lack of any new blockbuster product is what has analysts and impatient investors calling for the firing of Tim Cook. They feel Apple needs to release products in new categories every couple of years and because they haven’t, the stock remains well below its high of $700 a year and a half ago.
For my money though, I am more than willing to bet that we will be getting something new this year (Tim Cook guaranteed it) and other new things trickling into 2015. Specifically we should see:
1) An updated Apple TV unit that might have motion control, gaming, and its own App store.
2) An iWatch that is NOT like the crappy Samsung Gear and something more like this.
3) Bigger screen(s) for the iPhone 6 which will take market share away from Samsung (my wife is waiting for the larger iPhone 6).
4) Finally, a new mobile payment processing system which was the real reason for the fingerprint ID introduced with the iPhone 5S’s. This new entry into the lucrative market of payment processing should open up a whole new revenue stream for Apple whenever they introduce it which will likely be in 2015 or 2016.
Now Is The Time To Buy Apple Stock
Investors in Apple today, somewhere between $500 and $530 are getting all that value that for some reason, the bears seem to ignore or dismiss. There is no doubt that Apple’s secrecy hurts the stock’s price because these Apple bears keep pounding out articles about how the company has nothing new. Eventually this daily barrage of negativity weighs on investors and makes them less likely to buy the stock. But Apple keeps silent and that means a cheaper stock price for you and me until the cat is out of the bag.
Someone who can see that obviously new things will be coming soon and is willing to wait for them, Apple stock presents a wonderful opportunity to make money with little downside. Yes, there are the tired old arguments of increased competition, falling margins, lower market share, etc. but these all have been rehashed to death. I believe Apple knows exactly what it is doing as it lays down the foundation for the next 10 to 20 years by carefully crafting an array of products and product services all centering around an ecosystem that people love.
*Disclaimer: Please consult your financial advisor and/or your stock broker before taking any advise on this website.