Arvind S's  Instablog

Arvind S
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  • How Long Can Apple Sustain Its Run? 0 comments
    Apr 9, 2012 12:23 PM | about stocks: AAPL

    Can Apple keep going higher? This is a question that is on everyone's mind. Analysts are pounding the table with price targets greater than $1000. Gene Munster is an analyst that I greatly respect and he was way ahead of other analysts when it comes to Apple. When Apple was a slow compounding stock, he predicted Apple TV, return of capital to shareholders, etc. Now that Apple has announced dividends and dividend investors are piling in, Apple stock had a pretty good run within a short period of time.

    So, what is Apple's future? Apple is a product company. As long as it keeps coming up with innovative products, the stock will keep going higher. When I look at Apple's recent history, the success started with the introduction of iPods, then iPhones and now iPads. Among these products, iPhones are their biggest revenue driver. How can Apple increase revenue? 1. By signing up more carriers. Initially Apple started with AT&T, then signed on with Verizon and Sprint. So, still there is some opportunity left with T-Mobile. When it comes to China, there is still one behemoth carrier still left. If Apple can get China Mobile onboard, then that would add to its earnings. 2. By introducing new models: IPhone 4s was a big success despite pundit's complaints that it didn't offer any new features other than Siri. So, IPhone 5 will be a big blockbuster device for Apple. 3. By introducing new products: ITV/IPanel would also add to Apple's earnings. The interesting thing here would be to see if Apple is going to be satisfied with selling devices or to get recurring revenue from users by offering TV channels, movies, music, games and what not. Integrating with other Apple devices would be a huge boost.

    So, Apple still has gas left in its tank to sustain the momentum for another 3-4 years. But, all good things come to an end. Kingdoms fall and that's the nature of the beast. Now, there are still plenty of people without iPhones and iPads in China and elsewhere. But, once you sign on with all major carriers and have covered the globe with a huge market share, where would you go? Can Apple pull the perennial rabbit out of the hat forever? Will people keep swapping their old iPhones for the new models every year or two? Will people update their iTV every 3 years? Despite these lingering questions, Apple still has plenty of room for growth. Until then, buckle up and enjoy the ride.

    Disclaimer: The article is author's opinion only. Author is not a registered investment adviser. Please do your own due diligence before investing.

    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.

    Stocks: AAPL
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