Daily Gains Letter

Why Apple Stock Looks More Intriguing Now

By for Daily Gains Letter |

Apple's Revamp an Investment OpportunityApple Inc. (NASDAQ/AAPL) gave investors some optimism after introducing its so-called “Android” killer—its “iOS8” operating system—at the Worldwide Developers Conference.

The upcoming update to Apple’s operating system incorporates some great changes, including advanced healthcare, music, and home monitoring applications.

Yet while there’s definitely some excitement from Apple users towards the new operating system, the reality is that it will likely still not be enough to knock Android off its perch as the top mobile operating system in the world, powering about 85% of all phones worldwide, based on my stock analysis.

Apple is clearly working on improving its platform and is expected to introduce a bigger screen on its “iPhones,” but my stock analysis indicates that the problem is that the cost of the phones remains prohibitive to buyers, especially in the emerging markets in Asia and Latin America.

As my stock analysis suggests, the company is still so set on protecting its margins that its iPhones remain relatively expensive versus Android and other phones. Just go to your local mobile dealer, and you will see that while the iPhone has come down in price, the associated contract continues to be quite expensive versus that of other smartphones.

I experienced this firsthand after I just switched from the iPhone to the Samsung “Galaxy.” I bought the “S4,” which is a slightly older model versus the new “S5,” but it’s an excellent phone. It uses the Android operating system, which I actually like more than “iOS7.” The only problem is that my “iPad” refuses to acknowledge my S4 as a hotspot via the Bluetooth connection, which is not surprising, given how Apple wants consumers to buy only its products.

On the tablet side, I admit that in my view, the iPad is a superior tablet to the Samsung Galaxy, and I can’t wait to update to iOS8 in the fall.

As a potential investment opportunity, Apple is definitely becoming more intriguing, based on my stock analysis. Besides the pending launch of iOS8, I like the fact that the company acquired Dr. Dre’s Beats headphone business and will incorporate the music business into its “iTunes” service, hoping to re-energize the unit that has been struggling, as my stock analysis indicates. The fact that Apple will allow purchases on iTunes to be shared across multiple devices is also a big improvement.

I also like the company’s launch of its “CarPlay” solution for the auto sector. CarPlay aims at making the iPhone a powerful add-on in the car, which is another positive step in redefining Apple, according to my stock analysis.

As my stock analysis indicates, the changes made by Apple will help, especially in the domestic market where it’s tops. But for real success, the company will need to get its phones in the hands of consumers in the emerging markets that account for more than a third of the world’s population and are a highly lucrative market for Apple—if it can get in. Only if this happens will Apple become a real investment opportunity, based on my stock analysis.

At this time, I would be looking at Apple as an investment opportunity, especially if it can expand the sales of its iPhones to the emerging markets, based on my stock analysis.

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