Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is Apple Inc. (AAPL) Still a Punch Card Stock?

For years, Apple Inc. (NASDAQ:AAPL) was the perfect company for a large-enough-to-be-diversified, but small-enough-to-be-manageable stock portfolio. But the tech giant’s once high-flying shares have recently started sinking. If all your holdings had to fit on a 20-company punch card, would Apple Inc. (NASDAQ:AAPL) still deserve one of those precious spots?

Apple Inc. (NASDAQ:AAPL)

Growing, but how fast?

For over a decade, Apple Inc. (NASDAQ:AAPL) saw fantastic growth rates, regularly exceeding 30%. iTunes, iPod, the iPhone and iPad all wowed consumers and won perpetual Apple Inc. (NASDAQ:AAPL) customers. On top of that, Apple Inc. (NASDAQ:AAPL) developed a loyal computer following, making the company all-encompassing in households that used a Mac.

Today, growth has bottomed out in the recent quarter, at just under 1%. If this is a harbinger of things to come, then Apple Inc. (NASDAQ:AAPL) is in trouble. However, this “no” growth rate represents the apparent end of a product cycle, since it has released no substantially new products for several quarters.

Apple recently hinted in its recent quarterly conference call  that it is about to begin a new product cycle. This could be just in time, because if blog and media grumblings are any sign, there is pent-up demand for a set of updated products.

Expected to be coming first are new iPhones, including a less expensive version for emerging nations where the population is just beginning to move to data enabled phones.  Indeed, over the next two to three years, estimates  from the International Telecommunication Union indicate that about a billion new smartphone users will come to the market, raising the number to approximately 3 billion.

Apple currently has about 17% of global market share for smartphones, a distant but significant second to Google’s Android phones. If it approaches that percentage for emerging nations, Apple would dramatically increase its number of customers. Given the stickiness of Apple customers, an increase of potentially tens of millions new users is significant even for a company so large.

Apple’s stickiness stems largely from the multiple products it offers, in particular music, books and cloud storage, as well as, the inter-connectivity of its devices. For example, according to a recent Raymond James report, the iPhone’s retention rate is nearly 90%.

The report also demonstrates that iPhone does relatively better in more affluent markets, which bodes well if the global middle class indeed continues to grow. If Apple does launch a less expensive phone, it could lead to long-term customers who spend more over time as their financial circumstances improve.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.