I have such an intense enthusiasm for Apple Inc. (Nasdaq: AAPL) that my collection of the company's products sounds a lot like the lyrics of a famous Christmas song: five iPhones, four wireless routers, three MacBooks, two Apple TVs, and one pair of iPads.
And while my love for the company's products is great, and would certainly be a factor, I can assure you that my analysis of the profit potential posed by Apple stock will be like any other recommendation I make – completely objective.
But with a polarizing "cult" stock like Apple, that's clearly not a claim that every analyst can make. You see, when I compare the current bull and bear stock-price predictions for Apple, I feel as if I'm reading about two completely different companies.
With Apple, it seems, there's no middle ground.
This intense disagreement is actually one of the factors that have been holding down Apple's share price. Coming, as it does, on such a high-profile stock, the tug-of-war between the opposing camps plays out in the headlines each day. And it's causing so much confusion – and outright frustration – that most potential Apple investors are sticking to the sidelines and are choosing to ignore the stock altogether.
That's unfortunate… because this stock is actually one of the most intriguing profit plays that I see right now – a big-name brand in turnaround mode, and a tech stock that poses less-than-average risk.
And as profit opportunities go, this is a big one.
I see two major catalysts here that are perfectly positioned to drive Apple stock higher.
Indeed, this has the double-your-money profit potential that we target for you here at the Strategic Tech Investor.
And when this stock rallies, the folks who listened to the bears will realize they'd been suckered.
A Tough Assignment
Sometimes it really stinks to be the guy who replaces a legend.
Jeffrey Immelt had to do it when he succeeded Jack Welch at General Electric. Heartley William "Hunk" Anderson had to do it when he followed Knute Rockne as head coach at Notre Dame. And current Apple Chief Executive Officer (CEO) Tim Cook had to do it by taking over for the late Steve Jobs, the Apple co-founder who later came back and turned the struggling firm into a consumer-gadgets powerhouse.
Under Cook, the Apple stock price has plummeted from the all-time record closing high of $705 a share set back in September 2012. In recent months, as the company continued to struggle, the buzz was that Cook was in well over his head.
I don't agree.
I keep a sharp eye on Apple and I think Cook is doing about as good a job as anyone could be expected to do after succeeding a legend like Jobs.
Jobs knew how to create products that could get hard-bitten tech veterans like me emotionally involved with machines in a way that few business leaders ever have.
Candidly speaking, no CEO I can think of could truly replace Jobs. Maybe Elon Musk, the role model for the "Ironman" movie franchise. Though brilliant, Musk is not an iDevice expert, and he's a little tied up right now running Tesla Motors Inc. (Nasdaq: TSLA).
And now there are signs that Cook is winning Wall Street over. At a recent price of $505, Apple's shares have already recovered 29% of its value from the closing low of $390.53 reached back on April 19.
The reason why I wanted to talk with you about Cook's tenure is this subject is an aspect of the five rules I've created to generate tech-investing wealth.
Rule No. 1 says "great companies have great operations." And great operations almost always start with leadership. Having analyzed Apple's performance during Cook's tenure, I believe the firm meets this rule's mandate.
Cook is also focused on improving value for the shareholder. Besides achieving high profit margins, he has set aside $100 billion for dividends and stock buybacks.
A Powerful Start
At the end of the day, a corporate CEO is no different than a baseball team manager or an NFL head coach.
They get judged on results.
And lately Cook's been getting some pretty good ones.
Take the two new versions of the iPhone that the Silicon Valley pioneer recently released.
Apple sold a record-breaking 9 million new iPhones during their recent introductory weekend. Those sales figures swamped the forecasts of industry analysts who had predicted unit sales of 5 million to 7 million.
The market research firm Localytics estimated that more than 75% of the launch sales were for the follow-on iPhone 5S model, with the remainder going to the much-maligned, plastic-cased 5C.
The 5C did pretty well in the U.S. market following its rollout. And those decent results flummoxed Apple's skeptics. You see, the 5C was supposed to be a "cheap" version of the regular iPhone, which has an aluminum case.
But now Apple has already found that its customers are flocking to the higher-priced (and higher-profit-margin) iPhone 5S, so it's already cutting back production orders for the plastic-housed phone.
But the 5C served its purpose: It allowed Apple to ramp up enough supply to avoid any shortages that would have robbed the company of sales and sparked customer and investor angst at a key juncture in the firm's post-Jobs period.
And the migration to the costlier phone helped preserve Apple's profit margins – enough so, in fact, that heartened Wall Streeters sparked a surge in the company's share price.
The iPhone, in other words, has recovered some of its "iconic" status.
And it looks like the company has, too.
A Billion Here, a Billion There
Although the successful iPhone launch has added some oomph to the Apple-share-price rebound, there was an earlier catalyst that first gave the stock its northward launch.
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.