Apple Inc. (NASDAQ:AAPL) Stock Has Lots of Growth Potential
As Apple sets the date for its next iPhone launch event on September 09 like last year, Apple’s stock has been in the doldrums for a while. But that could be just a summer slumber before the action picks up again as traders return from their vacations.
In recent years, Apple stock has tended to end the year higher than where it was at the beginning of the year — including in 2012 when the stock touch a high in September before dipping as much as 30% by the end of the year. This year, Apple stock began around $110 and that’s where it is right now after the wild ride of this week.
Apple stock analysts such as FBR Capital’s Daniel Ives believe that the Apple stock is due for some gains and has a price target of $175. The China downturn fears may be exaggerated as Mr. Tim Cook’s email to Jim Cramer of CNBC confirmed in a move that spooked some as possibly violating SEC guidelines regarding public sharing of material information that may impact the price of the stock.
Now that the roiled markets are calmer, the next few months and the next few quarters should see a steady rise in Apple stock price — even if not by as much as Mr. Carl Icahn desires them to.
Apple’s growth momentum will derive from a large reserve of iPhone users who have not upgraded to the iPhone 6 and iPhone 6 Plus so far and will go for the iPhones that will be announced on September 09. Similarly, despite the slowdown in China, more Android users there may opt to try out their first iPhones. The Chinese market consisting of a young and rising middle class is far from saturated.
Merrill Lynch Apple analysts have a neutral rating on Apple stock with a target price of $130.
Even if Apple continues performing at the same level of iPhones shipped and profits booked, the company will keep adding to its cash reserves of nearly $200 billion as it soaks up most of the profits made by the smartphone industry.
With Apple iPhones priced at $650 and $750, Apple enjoys a ridiculous profit margin and a low P/E ratio of 13. Apple’s market capitalization may be down from the record $750 billion levels at $650 billion, but that only presents a buying opportunity in a company with a turnover greater than $200 billion.
Apple’s major competitors in the technology field, Google and Microsoft, both have stocks trading at P/E of 30. Apple stock has declined by more than 12% in the past six months and that shows what great value the Apple stock presents at the moment. For individual and institutional investors with a long-term outlook, this is a great time to buy into the Apple growth story.