Apple Inc. (NASDAQ:AAPL) continues to tear up the track, racking up nearly 40% gains since the beginning of the year. On top of that, AAPL stock still delivers a solid 1.6% dividend yield.
There is no doubt that this consumer electronics icon has been on quite a run for a long time. A decade ago it was trading at one-tenth where it is now (before its 2014 stock split).
The difference in that decade was the launch of the iPhone. This is the game changer that vaulted AAPL into the big leagues. And iPhones have been the engine of growth for AAPL ever since.
As we approach the 10-year anniversary of the iPhone with the launch of the iPhone 8, many expect Apple stock to go deeper into orbit. And that may well be the case.
Second-quarter earnings announced in May came in ahead of expectations and the company’s cash reserves were up 13% year-over-year to nearly $257 billion. IPad sales were up double-digits in the quarter (compared to the year-ago quarter) in most of its major markets — U.S., Germany, France, Japan and China.
But the real question for Apple Inc. at this point is the iPhone 8 launch, which has been delayed. Rumors suggest iPhone 8 will have facial recognition software rather than its current Touch ID, while a later update will re-implement the fingerprint scanner.
Some say the delay and the loss of the Touch ID is because iPhone 8 will have an OLED screen and they were having trouble making the Touch ID work consistently on that particular screen.
Regardless of what’s true and what’s speculation, there are some big opportunities, as well as big risks, ahead for Apple. Now, I am not saying that a bad iPhone 8 launch is going to doom the company. But as long-time fan of AAPL stock, I would welcome a pullback, so I can get in and buy more.
What Lies Ahead for AAPL Stock
Along with a new series of phones and tablets and computers, Apple is also looking to spend $1 billion for original content. This is also an exciting and risky move to bulk up its AppleTV and Apple Music/iTunes products. Its goal is to acquire or produce at least 10 shows next year, according to Ars Technica.
Competitors HBO spends about $2 billion a year on programming and Netflix, Inc. (NASDAQ:NFLX) spends about $6 billion. There is money to be made here and it fits nicely in the product array Apple currently has.
But moving from a tech firm to an entertainment firm can be challenging. And it may not be smooth sailing. However, AAPL has the wherewithal to learn from its mistakes and build value for its customers as well as its shareholders.
Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.
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