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Apple Stock Price Headed Higher Despite Muddled Earnings

Apple Inc. (Nasdaq: AAPL) has a strong quarter ahead of it, and plenty of catalysts to drive the Apple stock price higher, but you'd never know it from the reaction to yesterday's (Monday's) earnings report.

Investors, it seems, can't get past an admittedly murky Apple earnings report.

While the Cupertino, Calif.-based tech giant generally beat Wall Street expectations, investors knocked as much as 4% off the Apple stock price in after-hours trading.

Sentiment reversed by morning, however, pushing the AAPL stock price up as much as 1.75% before reversing again.

Apple's Q4 earnings, posted after the market close yesterday, were good but not spectacular. But when it comes to Apple, anything less than spectacular is usually a disappointment.


Profits came in at $8.26 per share, which beat expectations of $7.92 but fell short of the year-ago quarter's $8.67.

Revenue of $37.5 billion beat forecasts of $36.8 billion as well as year-ago sales of $36 billion.

But gross margins fell from 40% last year to 37%, stirring concern among analysts that Apple is feeling pricing pressure from competitors selling cheaper mobile devices based on Google Inc.'s (Nasdaq: GOOG) Android software. Apple's guidance that margins would remain flat in the December quarter did little to ease those concerns.

Sales of Apple's products were also a mixed bag: 33.8 million iPhones versus 31 million expected, 14.1 million iPads versus 14.5 million expected, and the 4.6 million Macs that exactly matched expectations.

Apple's cash pile stayed about the same at $146.8 billion, as the company has been paying more of its profits out in dividends and using it for stock buybacks.

Why the Apple Stock Price Will Go Up

But is Apple stock a buy?

Money Morning Capital Wave Strategist Shah Gilani thinks so. This morning he told Stuart Varney of FOX Business' "Varney & Co." why he's been bullish on Apple since mid-summer – and still is.

"I think it is going to take off. I think it's already made a great move," Gilani said. "It's up about 16% from where we got in. I think it's got a lot more to go."

Gilani likes what Apple has been doing to return money to the shareholders, but also has several reasons why he thinks that the company's days as a growth company are not over.

Gilani makes his very convincing case for a rising Apple stock price to Varney in the video clip above.

Shah Gilani is not the only Money Morning expert that believes in the power of Apple. Defense and Tech Specialist Michael Robinson calls Apple "one of the most intriguing profit plays that I see right now." The company's prospects are so impressive, in fact, that he says the Apple stock price will double from here…

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  1. H. Craig Bradley | October 30, 2013


    Shah was very much tentative ("wait and see") about Apple through much of this year. Suddenly, he has turned very bullish on Apple, based largely on potential ( China Mobile Deal, Carl Icahn's shareholder activism, new products ). Apple has always had potential, both to surprise to the upside, but also to the downside. Both sides coexist.

    Apple can draw lots of liquidity from the marketplace and momentum players can pile on again at some point like they did last year. So, before Apple "really takes off" first decide what a good exit price would be and wait and see. If Apple gets back to $600.00/share sometime next year, I will take some more chips off the table. I agree with Keith Fitz-Gerald that Apple is still not innovating with new ("amazing things") products and the market still has high hopes for potential "vaporware" yet to be released. So far, its not delivering on that potential. If the market turns, look out.

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