Apple Inc. (AAPL)’s Stock Poised for a Major Breakout: Morgan Stanley

Apple Inc. (NASDAQ:AAPL)’s stock sailed past $100 today, up nearly 1.5% at least partially on the strength of a new investor report released by Morgan Stanley which offers a glowing assessment of the company’s outlook ahead of the release of the next iPhone models. Business Insider examined the Morgan Stanley report and divulged eight of its key reasons as to why Apple Inc. (NASDAQ:AAPL)’s stock won’t suffer the same fate it did after the iPhone 5 release two years ago.

Apple Inc. (AAPL)

In finance-related measures, Morgan Stanley analyst and report author Katy Huberty points to the low institutional ownership rates of Apple Inc. (NASDAQ:AAPL) stock, at just 2.3% of the portfolios of the top 100 institutional holders of shares. That is little more than half its peak of 4.5% in 2012, and well below even the S&P 500’s 3.4% rating.

There’s also the matter of Apple Inc. (NASDAQ:AAPL) greatly increasing their cash dividends to $11 billion from $2 billion in 2012, and repurchasing $31 billion in shares, for a total yield of 8.5% compared to 0.5% when the iPhone 5 was launched, which should result in share prices increasing. The report also touched on the sizable investments Apple Inc. (NASDAQ:AAPL) has made over the past two years, and particularly this year in R&D, M&A, and talent acquisition.

Those factors aside, it still comes down to products, and the report believes Apple has two big winners on their hands with the iPhone 6 and its larger screen, as well as the rumored iWatch, which the report estimates could sell 60 million units of within a year. While 60 million is on the upper end of the estimation spectrum, even lower estimates have Apple Inc. (NASDAQ:AAPL) selling at least 35 million iWatches within a year.

One factor to consider in opposition to the rosy report glow is that the iPhone 6 and its larger screen will likely further erode already waning iPad sales. However, if the iWatch can replace it and provide the high margins that are expected of it, those sales won’t be missed.

Huberty maintains a target price of $110 on Apple Inc. (NASDAQ:AAPL) shares.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!