“Siri, how is Apple Inc. (NASDAQ:AAPL) stock performing?” A soft double ring assures me Siri has gotten my message and is contemplating a response. A short time later a friendly, somewhat snarky voice answers, “It’s been better.”
“It’s been better” is a generous description of the stock’s performance. If for a moment Siri dropped her clever personality, I venture it might say something along the lines of “it’s gotten crushed.” Year to date the Dow is up about 14%, while Apple is down 15%.
Less than a year ago, Apple Inc. (NASDAQ:AAPL) was heralded as the market’s best stock, possibly even the first $1 trillion dollar company. What has changed? Aside from the addition of a handpicked CEO, relatively little. Apple remains strong, and fortunately for you the market’s loss can be your gain.
Bears swiping at Apple Inc. (NASDAQ:AAPL)’s stock price have created a profitable entry point. The time is ripe for hesitant investors to become shareholders. Apple is dedicated to expanding shareholder value, here’s how.
A moat of protection
One moat is typically enough to protect a castle and ward off attackers. Fortunately, Apple has two to protect its massive cash pile.
Apple’s brand name might just be its most valuable asset. Thousands of loyal fans will wait in line for days to be the first recipient of Apple’s latest product. These customers will gladly pay a premium for an Apple logo on their device. In addition to its loyal fan base, Apple’s brand is synonymous with easy-to-use products and cutting edge technology. Apple Inc. (NASDAQ:AAPL)’s mind share is commanding, a claim few competitors can make.
It’s no secret that Apple makes great products, but so do other companies. What keeps customers coming back to Apple? A highly integrated range of products. Customers that purchase iPhones want the ability to seamlessly transfer their work to a computer or tablet. Purchasing the other products in the Apple suite (cross-selling on Apple’s part) gives this power. If a consumer buys a Blackberry Q10 from Research In Motion Ltd (NASDAQ:BBRY), he might receive a single decent product at a low price, but with no integration. RIM only makes money once.
In today’s fast paced world, time is a commodity. Integration saves time. Consumers will gladly pay a premium for the service. Competitors, for example, have caught wind of the trend. RIM has released Dropbox and Office 365 apps to bridge the gap between devices. Unfortunately, these services pale in comparison to Apple’s iCloud and are too little, too late. Consumers have taken note as it lost three million subscribers last quarter. Moats of protection are easy to overlook, but they increase and protect shareholder value over the long-term.
Unlike many of its industry peers, Apple Inc. (NASDAQ:AAPL) is relatively tight-lipped about its new products and ongoing projects. For example, Google Inc (NASDAQ:GOOG) is promoting its much hyped Google Inc (NASDAQ:GOOG) Glass, a product that consumers will not be able to purchase for at least a year or two. While Google Inc (NASDAQ:GOOG) is diversified, Apple is extremely focused on a few select products. History has shown that Apple’s focus is rewarded.
Apple has not launched a groundbreaking product since its introduction of the iPad in 2010. While Apple has released multiple line extensions of its products, consumers are clamoring for a new innovative product. This creates an opportunity for investors to capitalize. Apple will launch a new product sometime within the next year. Whether it’s Apple TV, the iWatch, or a completely new concept, the stock will pop, immediately creating value. Apple Inc. (NASDAQ:AAPL)’s focus will make this product a hit among consumers, creating long-term value shareholder value.
Note Apple’s performance after Steve Jobs announced the original iPhone.
Source: Y Charts