Apple Inc. (AAPL), Google Inc (GOOG): Teens Have Power Over Your Investment

Page 1 of 2

It might give some people a very uneasy feeling, but that doesn’t change the fact that American teenagers could play a role in several different investments. Teens have migrated to computers, phones, and gaming consuls as an everyday form of socialization.

While teenagers will never “make or break” a company like Apple Inc. (NASDAQ:AAPL), they could definitely play a role in how the company performs. Statistics show that approximately 25% of teenagers own a smartphone and use it not only for calling/texting but also for accessing the Internet. In 2012, there was a 14% increase in smartphone usage among teenagers when compared to the previous year.

Apple Inc. (NASDAQ:AAPL)

The iPhone accounts for approximately 50% of the total smartphone market share in the U.S. but less than a quarter of the market share worldwide. Apple Inc. (NASDAQ:AAPL)’s iPhone accounted for approximately $83 billion of revenue in 2012. Let’s be conservative and say that only 15% of those iPhones were sold to teenagers. — that’s $12.5 billion, which represents almost 8% of Apple Inc. (NASDAQ:AAPL)’s total revenues in 2012. Remember, that’s 8% of Apple Inc. (NASDAQ:AAPL)’s total revenues being generated by teenagers through just one product. Due in large part to the struggling stock, Apple Inc. (NASDAQ:AAPL) is very cheap as it shows an 11.7% FCF yield.

Google Inc (NASDAQ:GOOG) is another company that receives billions of dollars of revenues from teenagers. Generation C (the newest generation) spends 74% more time viewing YouTube videos on their smartphones than they did just one year ago. 76% of young adults (ages 18-34) own smartphones, and Google Inc (NASDAQ:GOOG) owns approximately 70% of the global smartphone market share with its Android devices. Just how relevant is YouTube? Well, they see over 33 million users per day and nearly 1.4 million every hour. In fact, if YouTube were a country, only China and India would be larger.

Google Inc (NASDAQ:GOOG) generated nearly $50.2 billion in revenue throughout 2012, and almost 18% of that is from Android devices or YouTube. So, approximately $9 billion was derived from these two areas, which are seeing solid growth from teenagers or young adults. Google Inc (NASDAQ:GOOG)’s FCF yield is 5.2%, and they show a P/E of 24.6. It is not incredibly cheap, but for a stock that has increased nearly 24% in the past year and more than 64% in the past five years, it’s not too bad of a bargain.

Page 1 of 2