Apple (AAPL) took an ugly tumble last September, and the downward slide continued for a good part of 2013. But in the last few months, AAPL stock has finally regained some momentum.
In fact, shares of Apple just recently broke into the black for the year-to-date period.
Yeah, yeah … AAPL stock is still only up around 5% since Jan 1. Meanwhile, the S&P 500 and Dow Jones Industrial Average have enjoyed gains of 26% and 22% respectively. Plus, shares of Apple stock are still down 5% over the last 12 months.
But AAPL stock has been hot since mid-summer, with Apple up a market-slaying 40% gains since its late-June low. So is it again time to pick up some shares of Apple stock?
The answer just might be yes.
AAPL Stock Could Keep Climbing
One reason to believe in Apple now is the fact that its downfall was not entirely stock-specific. Yes, AAPL stock is not the only mega-cap tech operator that’s had issues. Companies like Cisco (CSCO), IBM (IBM) and Oracle (ORCL) have all posted lackluster performances. They’ve had difficulties finding growth and have faced headwinds in emerging markets, while AAPL has faced similar issues.
The good news is that there are signs that the situation may be on the mend … which would mean that AAPL stock could see further gains. One such sign has been the tremendous demand for Apple products during the start of Christmas shopping season. In fact, it looks like an Apple iPad is the must-have gift for the season. On Thanksgiving day (from 6 p.m. to 10 p.m.), Walmart (WMT) sold a whopping 1.4 million tablets and the Apple iPad was a best-seller.
The demand has certainly been driven at least in part by the fact that AAPL now has a much broader product line. If AAPL stock will have a lasting impact, the company needs to find ways to mainstream … and it seems to be working. Offerings like the iPad Air, iPad Mini Retina, iPad Mini and of course, the traditional iPad appeal to many income levels, with price tags ranging from $299 to $929.
But going into 2014, there may be more fuel for AAPL stock. Rumors are floating around that Apple snag a distribution deal with China Mobile (CHL). While the pricing will likely be on the low end, Apple stock should still benefit from the huge market potential. Keep in mind that CHL has over 750 million subscribers.
Of course, perhaps the most bullish case for AAPL stock of all is the fact that shares are still trading at a reasonable valuation, even after the recent gains. Apple stock is trading for just 11 times forward earnings vs. Microsoft’s (MSFT) multiple of 13 and Google’s (GOOG) multiple of 20.
For the cherry on top, AAPL stock investors are also rewarded with a decent dividend of 2.3%. And that may increase because of the pressure from activist Apple stock investors like Carl Icahn.
All in all, if the momentum continues with strong Christmas sales and key distribution deals in 2014, AAPL stock has just only begun its return to the bull phase.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.