Apple Inc. (AAPL Stock): Why I Am Bullish on Apple Stock This Christmas

apple stockApple Stock (AAPL) Has Noticeable Growth Catalysts

Apple Inc. (NASDAQ:AAPL) stock has been in the news since Donald Trump won the presidential elections last month. However, lately the situation seems to be improving since Trump has tried to improve his ties with the tech community. Earlier, in an interview with The New York Times, Trump had promised big incentives to Apple CEO Tim Cook if he built plants in the U.S., and last week, Trump invited him to his tech meet held at Trump Tower.

Apple stock has been inching up gradually over the last month and closed at $116.29 in the last trading session.

With Christmas around the corner, should we include AAPL stock in our shopping list?

There does not seem to be much good news for the company right now. Nokia Corp (ADR) (NYSE:NOK) has filed lawsuits in 11 countries against Apple over infringement of its patents. As per The New York Times report, for the past five years, Apple had paid Nokia a modest royalty for the use of its patents. But with the pact about to expire on December 31, Nokia wants Apple to keep paying for that portfolio, and is demanding that Apple license additional patents.  

The fight over patents is not new for Apple Inc. but may have some short-term impact on AAPL stock, which is dealing with another blow on the “MacBook” front.

The magazine Consumer Reports said Thursday in its blog post that the new series of “MacBook Pro” laptops did very well in measures of display quality and performance, but in terms of battery life, they found that the models varied dramatically from one trial to another. This is why these laptops are the first MacBooks not to receive recommended ratings from Consumer Reports.

These appear to be serious issues at the moment for Apple Inc., and the company is likely to tackle them over time. However, I am still bullish on the company as its iconic “iPhone” still seems to be on a growth path and its services are expected to grow at a rapid pace.

Despite having initial problems, the demand for the Apple “iPhone 7” has been growing stronger. Till last month, iPhone 7 demand had been higher than its supply, and the recent report by Brean Capital analyst Ananda Baruah says that the company could post its best holiday quarter revenue ever on strong iPhone 7 sales.

Famed analyst Gene Munster sees the iPhone 7 beating Wall Street estimates for March and June, and predicts next year’s 10th anniversary model to drive high single-digit to low double-digit growth. Apple is expected to use technology like an edge-to-edge OLED screen and glass chassis in at least one version of its next-generation handset. He refers to this “iPhone 8” model as the “iPhone 10.” (Source: “Apple wants to be known as a services company, says Gene Munster in farewell note,” Apple Insider, December 15, 2016.)  

In 2017, Services will be another interesting story as Apple Inc. focuses on its “iTunes,” “iCloud,” “Apple Music,” “Apple Pay,” and the various app stores to generate superlative growth. In the September quarter, the Services segment had posted an impressive 24% year-over-year growth.

Bottom Line on Apple Stock

AAPL stock may face certain hurdles in the short term, but its iPhone and Services stories are very much intact. Investors may have trouble looking at Apple Inc. as a services company, but with time, they will realize that the seamless network of hardware and software shall help the company compete better with its emerging competitors. Apple stock is likely to continue its upward march once that happens.