Apple (NASDAQ:AAPL) Computers held their annual Worldwide Developers conference in San Francisco on Monday 10th June, wowing attendees with a major software upgrade, iRadio, and a new Siri personality. Does this make Apple Computers a great share investment after having declined more than 37% from its September high?
I’m an avid user of Apple products, as I’m sure many of you are. Unfortunately, I had a terrible experience this week when my iPhone5 was stolen whilst I was at training. Luckily, I had kept my iPhone3 (having skipped the iPhone4). I didn’t realize how much technology had changed between these two iconic devices, with screen resolution, size, speed and design.
When Apple Computers held their annual WorldWide Developers Conference on Monday 10th June, investors held their breath in anticipation of what new and wonderful releases CEO Tim Cook would produce out of the rabbits hat. He didn’t disappoint.
The change in technology from my iPhone 3 to the iPhone5 is almost incomprehensible. But the soon to be released IOS7 (this is the software platform on which the iPhone, iPad and iPod work), will revolutionize the use of Apple products for years to come. It precedes any new upgrades to products that will be released in the future, and is hoped to inspire share investors to drive the stock price higher.
Apple Computers’ iPhone products took the simple mobile phone which could receive and make calls and text messages, to a device that is now personalized and can do everything from trading shares to turning on your oven at home. It has created a whole new industry for application development, and will lead the next technology revolution of ‘wearable’ devices such as an iWatch and Google Glasses.
Decline in Share Price
The share price of Apple Computers peaked at $705.07 on the 21st September 2012, and since then it has steadily declined. The recent low of $385.10 on the 19th April represents a decline of 45.3% over a 7-month period. Since that low in April, the stock price has consolidated in a sideways range.
From a fundamental perspective, Apple Computers remains an extremely attractive company. Earnings growth declined for the first time in the company’s modern history. This has sparked some uncertainty from investors, but the fact remains, Apple Computers remains an extremely cashed up company with strong revenue returns.
Great Share Investment
At the current price base, between $400 and $450, we view Apple Computers as a great share investment. The company has a small Dividend Yield, as most US companies do, but the growth prospects remain strong. On a Technical level, we would prefer to see renewed buyer interest first before accumulating shares. A break above $450 would still be a good buy, but entry should be based on Trend analysis.
Despite our positive outlook for the fundamentals of Apple Computers, the share price has still experienced selling pressure for the last several months. The cycle of investor sentiment needs to be broken, and that may not occur until the annual September product launch in a couple of months.
Until then, we will continue to view this price range as a great share investment. There are some very exciting opportunities ahead. Lucky for me, as my 2 year old iPhone3 is just not good enough. At least I now have an excuse to buy the latest iPhone in September!