Apple Will Be Just Fine

Stop freaking out and take Apple as it is -- a mature company.

Mar 24, 2014 at 7:00PM

We all know that Apple (NASDAQ:AAPL), famed for its Mac, iPod, iPad, and iPhone lines, is up to something. The fivefold increase in research and development since 2009 is likely indicative of some pretty serious innovation going on within Apple's walls. Now, of course, a good chunk of that is likely a result of an aggressive buildup of its semiconductor teams (the A-series processors will get even better), and the continual improvements in iOS and OSX aren't going to come any more cheaply, but there's something more going on here -- and investors can profit handsomely from it.

The iWatch drama
Apple's "genius" hasn't exactly been a result of coming up with a radically different/new product category. Cell phones and, yes, even smartphones predated Apple's iPhone. Tablets and MP3 players, too, came before the iPad and iPod, respectively. Apple's contribution has been the development of highly refined, easy-to-use devices that the masses found useful. This will be the flavor of whatever new device categories Apple ultimately has in store -- very refined and far more useful variants of devices that many of us use today.

Of course, given how persistent the iWatch rumor has been in the press, many of Apple's competitors, including longtime rival Samsung (NASDAQOTH:SSNLF), have already announced/released products in a bid to beat Apple to the "next big thing." Unfortunately, given the clunky nature of the products released thus far, it's clear that Apple's competitors don't really get it. If Apple does an iWatch, investors should be confident that it will most likely be the most refined offering on the market at the time of launch. And if the category really does have a future (remember, digital watches used to be all the rage back in the day), Apple will be the one to really take the lead here.

But it's not just the iWatch
When the first iPhone came out, it was amazing, right? Well, until the 3GS hit the market. Of course, that one was "it," the pinnacle of phones. Right? Nope. Fast-forward to today, and you'll hear the same old chatter about how it can't get much better than the 5s (other than, of course, a larger screen for some users). It's going to prove bunk and the iPhone 6, 6s, 7, 7s, and so on will all be pretty sizable improvements over what came before it. Users with the iPhone 7s will wonder how they ever got on with the "antiquated" 5s. These arguments also apply beautifully to the iPad. 

And it's that innovation cycle -- particularly as Apple is in control of both the hardware and the software -- that will ultimately drive iPhone sales steadily higher. Will it be an explosive s-curve of growth? No, probably not. Will Apple be doing mid-high double-digit year-over-year growth rate on the top line? No, probably not. At some point, the party must end. But can Apple be a great long-term investment? You bet.

But you just said not to expect high growth rates!
Yes, you're probably not going to double your money in a year holding shares of Apple. After all, at a market capitalization just shy of $500 billion, it's tough to add another $500 billion in market cap. But can Apple reward shareholders with a nice and steadily growing dividend and share price? Of course, it can. As long as Apple continues to grow its revenues at a mid-single-digit annual clip (or better), and as long as Apple keeps its operating expense growth roughly in line with revenue growth and margins stable in the 37%-38% range, Apple should be just fine. Not an explosive growth name, but a stock that can serve as a good sleep-well-at-night core holding in a reasonably diversified portfolio. And, frankly, it's these kinds of "slow and steady" investments that offer some of the most compelling long-term risk/rewards on the market.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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