Apple Inc. (AAPL): A Change of Fate

One of the most loved stocks of 2012 has become one of the most hated in 2013. Analysts have always critiqued it, but now, some people are downright nasty when looking at Apple Inc. (NASDAQ:AAPL) . The company has cash, still has an unbelievable “fan base”, and is arguably one of the cheapest stocks available. People love to hate, but my question is “Why?”

Times have changed

Nothing is more obvious than how this investment has changed the way we view it. Just last fall, some analysts were expecting it to reach $1,000/share. Now, the stock is in the low-to-mid $400 range, and has fallen 36% since October of last year. The company has become cheaper because of the falling stock price, but should investors really put their money into a stock that is “struggling” so much?

Yes, but they need to understand that the times have changed, and Apple Inc. (NASDAQ:AAPL) may have changed its appearance as an investment. It’s not bad–its just different.

I believe the company will become (and already is) a cash cow. Yes, the company already has roughly $150 billion in available cash, and by releasing $100 billion of that to shareholders by 2015, the company may become the new dividend king.

Over the past five years, Apple Inc. (NASDAQ:AAPL)‘s shareholders have seen a larger increase in its stock than shareholders of both Google Inc (NASDAQ:GOOG) and Samsung. Both Google and Samsung have increased slightly over 89%, while Apple is up nearly 162%. Even with Apple Inc. (NASDAQ:AAPL)’s currently falling stock price, it is hard to deny its long-term growth. Now, in my eyes, the company will become more of a dividend stock.

Apple Inc. (NASDAQ:AAPL)’s sales and revenue continue to set records, and its $150 billion cash pile continues to grow. They already have a dividend yield of 2.6%, which will likely increase with the $100 billion being released to shareholders by 2015.

Keep in mind that if Apple can release the highly rumored iWatch or iTV, the stock could experience some impressive growth once again. After all, this would be the first new line of products since Steve Jobs’ passing. It would prove to consumers and investors a like that Jobs’ wasn’t the sole reason for the companies success/innovation.

Times have changed, but there are also a few things remaining the same.

What’s stayed the same?

Apple Inc. (NASDAQ:AAPL) users are still Apple fanatics. They will still buy the newest device upon release, and the company will more than likely retain that business. The iPhone is still the company’s biggest revenue generator, and its 91% retention rate shows how happy its users really are. After all, Android’s retention rate is just 76%. Not only is Apple Inc. (NASDAQ:AAPL) retaining its iPhone users, but its sales continue to rise as Q1 shipments rose 6.6%.

Competition certainly hasn’t died off in the past several years, which becomes obvious with Google Inc (NASDAQ:GOOG) and Samsung’s recent announcements. Samsung and Google are currently fighting over the Android world, and Samsung is winning. Yes, they have worked together to acquire the market they have, but Samsung is hoping Motorola’s (owned by Google Inc (NASDAQ:GOOG)) new smartphone, “Moto X”, will be another flop. Motorola only holds 1% of the market share, but Google just gave them $500 million to develop the device. The graph below shows that, despite Samsung and Google Inc (NASDAQ:GOOG)’s efforts, Apple is still expected to grow its marketshare.

As the graph above shows, Apple Inc. (NASDAQ:AAPL)’s market share is expected to grow to 42% by 2017, in comparison with Android’s plateau of 34%. Clearly, competition is not changing, but Apple still looks to perform well.