Apple (Nasdaq: AAPL ) should be, without a doubt, the coolest company you know.
Even when it was lost in a haze, meandering about with a 3% sliver of the computer market before the iPod and iPhone were around, Apple still had a stylish panache. After all, this was a company willing to put out desktops in the form of teardrops and tissue boxes.
One of the heartiest validations for Apple came just a few months ago, when Sirius XM Radio (Nasdaq: SIRI ) put out the XM SkyDock. It's essentially a portable auto receiver that uses an iPhone or an iPod touch as its display panel.
Think about that for a sec. The iPhone has just a tiny chunk of the wireless market, yet could you picture Sirius XM trying to create a SkyDock for the BlackBerry or Pre? Of course not. It had to be Apple, because Apple is just that cool.
2009 in review
Apple blazed through the recession practically untouched. It closed out fiscal 2009 in September with a 12% revenue boost and widened its margins to achieve an 18% surge on the bottom line. That would be a healthy year for most companies in good times, but the Apple story gets even better.
Apple's top and bottom lines accelerated during the final quarter. Revenue climbed by 25%, and net income soared by 44%. MacBook unit shipments rose by 35% during the same three months in which Microsoft (Nasdaq: MSFT ) -powered portables took a hit. Sure, there was a small decline in iPod sales, but that was more than offset by iPhone growth -- and iPhones double as iPods anyway, so let's not go writing off Apple's music platform anytime soon.
Perhaps the most impressive aspect of Apple's performance is that the company's not showing you everything. As of the end of September, Apple had $14.8 billion in deferred revenue on its books. Some of that is from AppleCare support and protection plans, but the real juggernaut there is the iPhone. Even though Apple is selling a ton of iPhones -- 7.4 million in its latest quarter alone -- the company doesn't recognize the revenue behind the sale right away. It's realized during the two-year run of the AT&T (NYSE: T ) contract.
A recent accounting-rule change to accelerate revenue recognition should help Apple on that front, since it packs a more potent punch to future income statements.
Then again, it's not as if Apple needs any enhancement work done. Apple has consistently beaten Wall Street expectations for several years now.
2010 in preview
Next year appears to be tee time for Apple's inevitable tablet, which should bridge the gap between its iPhones and MacBooks. With the iTablet, the sultan of style has a shot at overcoming its reluctance to enter the netbook scene, as well as its own AppleTV inefficiencies.
Apple will no doubt make new enemies, especially if its tablet device takes on Amazon.com's (Nasdaq: AMZN ) Kindle and Barnes & Noble's (NYSE: BKS ) Nook as a potential print-media savior. If it's marketed through wireless carriers as a connectivity gadget, it may very well disrupt the smartphone space, especially if Apple gets carriers to subsidize a steep discount to its price.
Even if there is no iTablet, one can naturally expect Apple to refresh all of its computing, portable-media-player, and iPhone product lines. That's what the cool companies do, Daddy-o.
Apple also may finally crack open its vault. The Cupertino giant has $23.5 billion in cash and short-term investments, with another $10.5 billion in long-term holdings. It's hard to justify that kind of mattress when your idle cash is generating just 1.1% in interest.
Apple could put some of the funds to good use and snap up Adobe (Nasdaq: ADBE ) , but flash-y acquisitions have just never been Apple's bag. The same can be said of dividends or aggressive share buybacks. Nonetheless, the company's got to spend that cash on something.
Along the way, Wall Street expects Apple to grow revenue by 23% in fiscal 2010 to $44.9 billion. Earnings should rise by 24% to $7.79 a share.
The company's growth prospects find Apple priced surprisingly reasonable at 25 times this new fiscal year's projected profitability, and 21 times next year's forecast. Keep in mind that analysts have been lowballing Apple's bottom line for ages. It will probably grow faster than 24%, earn more than $7.79 a share, and therefore sport an even lower forward earnings multiple.
Cheap chic? You have to love Apple.
Is Apple the tech stock to own in 2010? Share your thoughts in the comment box below.
To see the full list of candidates for the Best Tech Stock for 2010, use the sidebar at the right or click here.