NEW YORK (TheStreet) -- Apple
Markets have found a bottom value (just north of $400), and the most well-known brand in the world will now regain its footing and move back toward the higher end of its historical valuation for the rest of 2013.
The main fundamental driver for this will come in the back end of 2013, where the Street's earnings could rise as high as 15% (after the 14% declines that will likely be seen in the first half of this year).
Markets are clearly at an inflection point with the stock valuation of Apple, and this presents some excellent opportunities for investors looking to capitalize on the rebound. While the June quarter might not be stellar, any lags in the stock price will only extend the window of opportunity for new buy positions.
Most promising will be the new line of products scheduled to roll out in the second half of the year. This will be the central reason to own the stock.
Additionally, there is a growing chance Apple will start giving back more cash to investors, in a move that is long overdue. An announcement in this area is another factor that might come before the second half of the year, but once this is seen, it might be too late to latch on to the upside momentum.
Announcements to raise dividends could come as soon as the third week in April (when Apple reports its March quarter results). It's going to be a modest increase (from $10 now to just over $14), and based on largely the cash the company generates from U.S. markets.
Low-End Competition From Samsung
Fundamentally, what's probably going to be the more important question investors will ask: How is Apple going to be competing with Samsung in the low-end phone market? So, if investors feel a greater confidence in the product release schedule, we will see the next main driver for shares here over the next year.
A good portion of this will likely be based on whether Apple chooses to offer a cheaper iPhone, which is starting to look inevitable. The timing for this announcement and release has been tricky to anticipate, but this is most likely something we will see by the beginning of the December quarter. A move like this would be seen in conjunction with China Mobile
Another key question to ask is whether Apple will diminish its brand approach by offering a cheaper phone. But when we look at a combined cocktail of China Mobile (a 1.5 billion Chinese population with up to 700 million Internet users) and a reasonably priced iPhone (prices at $100-$200), a gargantuan consumer proposition is created.
The combination of these two players could potentially create the single biggest launch in consumer-electronics history in terms of pickup and adoption. These announcements could come as early as September (with shipments in October).
New Innovations at Apple
When considering a cheaper iPhone, it might be said that this does not reset the bar and move innovation forward at Apple. Instead, we will have to look ahead to the next product that truly disrupts the technology space (such as a new watch or eyeglasses products). There is still a possibility that Apple will unveil its TV this year, a product that has clearly been in the works for some time. Timing will again be critical here but the expansion into new areas of the household will surely re-energize interest in Apple as a product.
Other areas to watch surely can be seen with the much-discussed iWatch, which is more likely to be seen next year. If we take a step back and look at the big picture, the past six months have shown critical weakness for Apple, but when we look ahead to the next phases for the company, this weakness should only be viewed as a long-term buying opportunity for those looking to capitalize on the next wave of productivity.
Five-Year Time Horizon
In recent months, we have seen Apple stock prices move in line with the long-term trends, but the main question to ask is whether Apple will be able to recapture the market hysteria seen in 2011.
If we look at a five-year time horizon, there will surely be ups and downs in the stock price. But when we remember that consumer technology is a relatively new market (with roughly a 30-year lifespan), it should be noted that consumers are only beginning to spend money on technology.
Over the next two to five years, the first main event will be what happens in the low-end phone market. Beyond that, new wearable technologies (watches, glasses) will likely cannibalize the phone market, and all of this favors Apple investors buying on weakness and maintaining positions for a five-year time horizon.
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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