Why Apple Inc. (AAPL) Stock Is Ripe for Double-Digit Gains in 2017

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For shareholders of Apple Inc. (NASDAQ:AAPL), the year has been mostly lackluster. Yes, Apple stock is up 6% — but the S&P 500 is up 8%. And even slower-growth blue-chip tech stocks such as Microsoft Corporation (NASDAQ:MSFT) and Oracle Corporation (NYSE:ORCL) are up nearly 10% each.

Why Apple Inc. (AAPL) Stock Is Ripe for Double-Digit Gains in 2017

But maybe now is the time to get serious about buying AAPL stock, as a number of catalysts are threatening to provide some significant lift in shares.

The mobile revolution is likely to continue apace. According to research from Cisco Systems, Inc. (NASDAQ:CSCO), the number of mobile users will hit 5.5 billion by 2020, representing 70% of the world’s population. About 72% of the total will be smart devices.

Still, there’s no shortage of doubters on Wall Street about Apple, whose revenues are almost entirely powered by mobile (hardware) technology. Some are downright alarmist.

Take at KGI’s Ming-Chi Kuo. He believes that the iPhone 7 has reached its peak and pegs fiscal Q1 shipments at 40 million to 50 million, down from AAPL’s own estimate of 51.2 million.

Then there is Oppenheimer’s Andrew Uerkwitz, who has been sounding nearly apocalyptic. In a recent research report, he noted: “The risks to the company have never been greater. We believe Apple is about to embark on a decade-long malaise.”

Apple might be lagging. But it’s not BlackBerry Ltd (NASDAQ:BBRY) yet. This panic in AAPL stock isn’t justified.

The Apple Stock Bull Case

Apple boasts a sustainable moat, bolstered by a premium global brand, extensive logistics system, an ecosystem of developers and partners and a retail footprint. The company also controls both the device and software, which allows for a more seamless user experience.

The result? Apple has — for many years — been able to charge premium prices, which it still commands today. And that’s a luxury that almost no other hardware manufacturer can claim.

But that’s what provides AAPL with some support. What can actually push Apple stock higher from here?

The key will (unsurprisingly) be the iPhone franchise, which accounts for a majority of the revenues. The good news is that the launch of the iPhone 8 — which comes out next year — should be an attention-grabber, because Apple likely will have something big planned for its 10th-anniversary edition.

The buzz is that the new devices will use OLED (organic light emitting) screens, which will be thinner and perhaps even allow for bending. There may not be a bezel, either. This will not only make the device look sleeker — one of Apple’s hallmarks — but allow more room on the screen.

Tom Taulli is the author of various books. They include Artificial Intelligence Basics and the Robotic Process Automation Handbook. His upcoming book is called Generative AI: How ChatGPT and other AI Tools Will Revolutionize Business.

Another thing that could provide rocket fuel for Apple stock is Donald Trump. Analysts widely believe that Trump will push for legislation to coax companies into repatriating capital from overseas. No doubt, AAPL will be a big beneficiary as the company has a whopping $215 billion in foreign accounts, which represents 36% of the market cap.

If the company brings this back, there will be more resources for R&D, share buybacks and dividend increases. Keep in mind that the yield — which is at a meager 2% – could certainly use a boost.

Meanwhile, it’s hard not to love the valuation prospect of AAPL stock right now. Apple trades at just 11 times future earnings. When you strip out the cash, that multiple is less than 7!

So if you’ve been panicking about Apple stock lately, don’t. Some expected drivers in 2017 plus a bargain-basement valuation should drive shares by double digits next year.

Tom Taulli runs the InvestorPlace blog IPO Playbook and also has his own tax preparation firm. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2016/11/why-apple-inc-aapl-stock-is-ripe-for-double-digit-gains-in-2017/.

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