For the last 10 years, I have been trading Apple Computers on the US markets in one form or another. As stocks and options (derivatives) are my strategy focus, this has included strategies such as Covered Calls (Buy/Writes), various Spread strategies and directional views. The stock would be one of my more favoured trading vehicles, which I am constantly reviewing for opportunities to trade.
But has Apple seen its best days?
After a ho hum launch of the iPhone6 and 6+, it would appear Apple is chasing its’ competitors. What has happened to the innovative company that Steve Jobs built, and rebuilt, defining quality products, revolutionising the way we listen to music, and creating a completely new industry off the back of its products?
Take Apple’s 1980’s main competitor Microsoft. Here was a business, captained by Bill Gates, that had won not just the battle, but the war. Microsoft was the leader in personal computer, software having teamed with IBM to provide the first version of Windows, with Apple slipping into the shadows, battered and bruised.
But Microsoft was late in the revolution to Smart devices, starting with the iPod and morphing into the iPhone, iPad, and then the AppleWatch. Actually, Microsoft weren’t late, they just didn’t get the market as excited about their products. Can you even remember PDA’s, or Microsoft’s tablet that was released in 1991?
This is where Apple has truly excelled.
“PC’s” Blue Screen of Death
Have you been working on your PC, whether that is a laptop or desktop computer, and been presented with the Blue Screen of Death? There is no alternative but to attempt to restart the computer and hope that all the work you had been doing had been recently saved. And for the next month you are constantly wondering if it will crash again!
Once you have built confidence back in your beloved computer, and forget to save every 3 seconds, the Blue Screen of Death returns. Knowing fully that your confidence was high, and that the work you had been doing would be lost forever.
I’m not saying I’m anti-PC, or that I am the love child of Steve Jobs and pray to all things Apple. But as a recent convert to iOs and all things Mac, there is a clear difference in functionality, stability, and dare I say, confidence.
I don’t fear my Mac crashing, even when I’m running multiple software programs that would have otherwise caused my PC to pick itself up and throw itself out the window. “Honestly officer, I had no hand in helping that PC take that fateful fall!”
Not only do we have the safety net of not fearing our Mac’s might crash at any given moment, but I don’t have to spend the annual GDP of a small South American country in purchasing Anti-Virus software. Apple, up to this point in time, have been virtually free of viruses for the retail end user.
Midway through 2014, there were reports of malware that had been targeting Apple products. In particular, iPhones, iPads and Macs. Of course this was headline news as it had never been reported before, causing a “deer in the headlights” scenario for all Apple consumers as none new what to do.
Hmmmm – Are we all living a lie when it comes to our information security?
For those who remembered their previous life as a PC user, they hurriedly searched for Anti-Virus software, to conduct a Disc Scan, Defrag, and disconnect from the Internet, only to realize none of this really mattered for Apple products. In the end, the headline came and went, and no-one needed to do a thing.
However, I digress onto a whole other topic, which would itself require a mini-book. In fact, whole movies have been made about the topic. Still, knowing where Apple has come from, its battles, its achievements, has direct influence on our Outrageous Prediction for the share price of Apple in 2015.
Reinvention and future growth
Apple didn’t give us digital music, but they did give us the means on which to easily access it at home. They didn’t give us smart phones, but they gave us a smart phone that was easy to use and in the process created the Application industry. They didn’t give us personal computers, but they have given us products that are far better, stable, and reliable, albeit at a hefty price.
From the release of the first Apple 1 computer in 1976, to the iMac, the iPod, iPhone, and the iPad, Apple has been a company forged on invention and the showmanship of promoting the evolution of style and functionality. Some say this PT Barnum style fanfare for launching a product has since died with the passing of founder Steve Jobs.
However, the company has grown so big that it has created its own ecosystem where users sync in all their devices. And once hooked, rarely leave.
There was a lot of hype behind the AppleWatch launch in September, which failed to produce anything tangible in terms of sales, purely due to the fact that the product isn’t available for sale yet. But even the demonstration models lacked the punch or revolutionary insight that previous products have provided.
Many people do forget, however, that even the iPod didn’t revolutionize the music distribution industry overnight. Apple worked hard at implementing not just the device, but developing the iTunes store for accessibility to purchasing music. They worked on the Record companies, the distributors, and even bands themselves, until it has finally become the central point for all accessibility.
Apple’s ability to create a totally holistic environment for all your digital needs is expanding. How their products will benefit us in the future is not even known yet. But we have been given insight into how Apple is teaming up with global leading Credit Card companies such as MasterCard and Visa with the launch of their new ApplePay.
What this means is, you could rock up to your local coffee shop, purchase your coffee and bagel with a swipe of your iPhone, sit down and review your stock portfolio’s performance on your iPad, placing orders to buy or sell through our own EasyTrade® application, do your grocery shopping (online) before you leave, all the while conversing with your friends over your AppleWatch. And you are doing this without fear that any of these devices are going to be hacked or crash!
So what is the Outrageous Prediction for 2015?
The dynamics of Apple’s stock price have been consistent for more than a decade. Since listing on the stock exchange, Apple has split its price 4 times. That is, for every share an investor owned, the company has re-issued a larger number at an equivalent price.
These included a 2 for 1 split on June 16 1987; a 2 for 1 split on June 21 2000, a 2 for 1 split on February 28 2005, and recently a 7 for 1 split on June 9 2014. So over the last 10 years, if you had purchased 1 share, you would have experienced 2 stock splits, and would now be holding 14 shares.
With the share price trading around $118 (at time of writing), there isn’t an expectation that the company will look to split again in 2015. When you have the likes of GOOG trading around $540 per share, there is plenty of upside potential for Apple.
Annual Revenue of $182.80 Billion this year (yes you did read that right and it was a B, not an M) derives from products that in some instances are not leaders in their category (take iPhone sales versus Samsung Galaxy which outperforms).
Investors continue to pile onto Apple and drive it into new highs so why fight it?
The company has a Credit Rating of Aa1 according to Moody’s research, while Standard and Poor’s has an AA+ rating. Surely these predominant research firms have a little insight into the potential of future stock price performance?
It would be outrageous for me to state that Apple’s stock price will halve in 2015, and there is just no evidence to support that outlook.
Although sales of iPhones and iPads have declined, Apple is creating new revenue streams through ApplePay and the soon to be released AppleWatch. And there is always what CEO Time Cook has left up his sleeve to surprise us down the track.
The stock price of Apple will continue to rise and rise and rise. It has almost doubled in 2014, and while there will be periods of consolidation and mild downwards activity (as there always are with stock prices), our Outrageous Prediction is that Apple’s stock price will move higher again in 2015.
As such, we are maintaining our Buy the Dips approach, looking for opportunity to accumulate shares for long-term growth.
To discover our Outrageous Market Predictions for 2015 download the free eBook here