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Summary

  • Apple closed at a split-adjusted all-time high.
  • Last time we were here, the stock imploded.
  • This time will be different for some key reasons.

In September 2012, Apple (NASDAQ:AAPL) closed at a record high of $702.10; the stock proceeded to fall to below $400 per share and more than 40%, even as top Wall Street analysts were calling for a run to $1000. Monday, Apple shares closed at $100.53 per share, making it the all-time highest close ever on a split-adjusted basis. The obvious question is where do we go from here and is Apple set for another precipitous fall. Unlike the last time Apple was in this position, there are a collection of factors that I believe make the stock poised to climb significantly higher.

The Last Dance

Investors who are blind to historical patterns are frequently those most likely to fall into the trap of history repeating. Apple's last run to the stratosphere was centered around the release of the iPhone 5 extending a long standing uptrend in the stock. What is easy to forget is that the iPhone 5 was competing with the early generations of the Samsung (OTC:SSNLF) Galaxy line, when it was truly embodying the company's motto that "The Next Big Thing is Here." Samsung's Galaxy S3 had been released in May of 2012 and the company was hammering Apple with what turned into a quite effective marketing surge.

Additionally, because the S3 was the first Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Android smartphone to legitimately compete with the iPhone, it made the iPhone 5 release even more underwhelming. Android was gaining global market share, and the bar for Cupertino was set at an unprecedented level. Android remains in solid control of global market share, approaching 85% according to IDC, but roles are far more defined and well understood.

Why This Time is Different

To begin with, the psychological component should not be overlooked. The last time Apple shares were at all-time highs, they were trading at over $700 per share. This creates a significant mental barrier, particularly for a stock that has a greater retail following than most in its peer group. The recent 7-for-1 split, which, coupled with a strong earnings release, started the current run, has had the desired impact. While the stock is at a historic split-adjusted high, Apple shares above $100 per share does not seem that unusual.

The real story of why Apple has the potential to climb to new heights is the upcoming release of the iPhone 6, as well as the potential introduction of a new product line in the iWatch. Unlike the iPhone 5, the iPhone 6 is expected to give consumers a major upgrade in the one area that Apple has been long criticized: screen size. Apple always does a superb job of building hype going into a new product release, but this iteration should have legs. If Apple can follow up a successful iPhone release with the introduction of an iWatch that does all, or even most, of what has been promised, Cupertino will have reinvented the wearables market and reinvigorated the growth Apple needs.

The Trade

At the time of this writing, Apple is holding its record level in after-hours trading, but regardless of the immediate reaction the market takes, breaking $100 and the new record is important. I would see dips as real buying opportunities, but, even without dips, the stock has room to run as high as $115 by the iPhone 6 release date. A correction below $96 would be of concern, particularly if it is coupled with a broader market decline, but I remain a buyer of Apple here.

Source: With Apple Over $100, Time To Sell?