Shares of Apple (AAPL) hit another all-time high of $699.54 earlier and are closely flirting with the $700 price level on word from the company that iPhone 5 pre-orders topped two million units in just the first 24-hours.
"It's not too late to buy Apple," says Brian Sozzi, chief equities analyst at NBG Productions. "It creates euphoria, and I'm looking at 2013 for massive dividend increases."
In a bid to return some of its cash to shareholders, earlier this year new CEO Tim Cook announced Apple's first dividend in 17 years. The dividend was initiated at $2.65 a share, currently yielding 1.52%.
"I think it's going to be a one-two punch here. You're going to have a higher stock price, because next year you're going to have rumors about the Apple set top box, [and] iPad mini looks realistic to me. Dividend increase, share price up, win!" says Sozzi.
Along with the iPhone 5 came news that Apple is updating its 30-pin connector used for all iPhones, iPads and iPods since 2003. The new smartphone will connect through a digital eight-prong "Lightening" connector. The move has created uproar among consumers who will now have to buy an extra adapter priced at $29 or $39 to connect to old docks on chargers, alarm clocks and speaker systems.
For Sozzi, this opens up a whole new batch of derivative plays on Apple.
"They're essentially creating a massive upgrade cycle for their products over the next two to three years," he says. And the under loved, out-of-favor Gamestop (GME) is one of his top picks. Shares are down over 5% this year, and the company has been named as a good candidate for a private equity buyout.
"Gamestop bought a refurbishment company a couple of years ago; you could hand in your old goods to them," he says. "I think they're going to have a lot more supply, they're going to be selling this stuff around the world because the fact of the matter is not everybody can afford the iPhone 5."
"Gamestop is valued as if it's RadioShack (RSH), and they're going out of business," he says. "That is not going to happen. They remain the destination for videogames. There's a new console cycle coming out, you have the new product from Nintendo the Wii U, there is excitement and reason to go to the store."
Another pick is Amazon.com (AMZN). Sticking with the refurbishment theme, Sozzi believes people will spend the money to buy new accessories for the larger iPhone as well as upgrade their speaker systems and docks.
"Amazon, I think you'll have a lot of people buy the products, the accessories from Bose, from Logitech (LOGI)," he says. "But another thing I'm sensing too over the last couple of months, the analysts are not really caring how much Amazon is spending. That's a big shift in the debate in Amazon."
That shift, Sozzi explains, was over worries about their free cash flow and desire to build distribution centers. He says analysts are now more accepting and the stock is ready to rise above its all-time closing high $261.27 hit last Friday.
How are you playing Apple's rise to $700 a share? Are you buying it directly or trying to invest in some its beneficiaries? Let us know in the comment section below of visit us on Facebook.
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