Bull Of The Day: Apple (AAPL)
Apple (AAPL - Analyst Report) is a stock that needs no introduction to investors. The technology giant has come to dominate several markets, while its profit margins are the envy of many of its major competitors.
Yet following its massive stock split and its subsequent rise close to the $100/share mark, investors have to be asking, can Apple continue to march higher, or is the run over for AAPL?
Why Apple is Still a Buy
Several new products are really what makes Apple an interesting choice for investors right now. Obviously the most important is the new iPhone 6 along with the iPhone 6 plus. These new phones should help AAPL more easily compete in the smartphone market with companies that have been launching bigger phones, a trend which is definitely in vogue with consumers right now. Some even suggest that Apple could sell 60 million phones in the December quarter alone.
Beyond this key product, Apple also has some exciting new additions to its lineup coming down the pike. While we can debate about the viability of the Apple Watch, Apple Pay could be a game-changer in the mobile payments market.
Apple has secured deals with all of the major credit card companies for its payment system, and as such could blow competitors out of the water. And though it is hard to say how much of the market Apple will be able to capture here, mobile payments are expected to see a transaction volume approaching $100 billion by 2017, a 48% compounded growth rate when compared to 2012 figures.
The new iPhone and Apple Pay, along with a successful Apple Watch roll out a little further down the line, should help to give this massive company a number of fresh potential revenue streams that could provide AAPL with growth opportunities for years to come.
Earnings and Estimates
Thanks to some of these new products and predictions for the iPhone’s continued success, analysts have been revising their earnings estimates higher for AAPL. In fact, for both the current year and the next year time frames, not a single estimate in our consensus has gone lower, while both consensus estimates for these time periods show EPS growth exceeding 11%.
It also worth noting that Apple has a stellar record when it comes to living up to analyst expectations at earnings season. The company has beaten estimates by an average of 6.5% in the past four quarters and it is riding a streak of five consecutive beats as well.
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I know that historically Apple has risen in price with the release of new products, but I feel that the incredible run is coming to a close. This is, of course, strictly conjecture at this point.