The Motley Fool Previous Page

The Next Catalyst for Apple: Your Kids

Joe Tenebruso
December 1, 2011

You don't have to search long to read about many different potential catalysts that can drive Apple's (Nasdaq: AAPL  ) stock back to new highs. I listed several when I first purchased Apple in my Motley Fool Rising Star Portfolio, and I went on to list three more reasons to buy Apple shortly thereafter. I spoke about things like booming international sales and Apple's growing presence in the enterprise (corporate) market. Even more recently, when I added to my Apple position, I talked about the possibility for the tech juggernaut to launch a game-changing new Apple TV as early as next year. These are all exciting opportunities for Apple and could help make Apple shareholders very happy over the next several years. But there's another catalyst for Apple that may surprise you: your children.

According to research by Nielsen, the iPad, iPod Touch, and iPhone are the three most-wanted consumer-electronic items among kids ages 6-12. Kids seem to enjoy the interactive and intuitive nature of the gadgets, and many parents are using tablets and smartphones not just as playthings for their children, but also as learning devices.

Sales to parents are boosting Apple's current revenue, but what may be even more beneficial to the company is that parents are introducing their children to Apple technology. For many kids today, an iPad will be their first experience with a computer. And since Apple's products tend to be "sticky," with high customer-satisfaction ratings and repeat purchases, it's likely that many of these children will go on to become Apple consumers as they grow older. In this sense, Apple is building future demand for its products and solidifying its customer base, not unlike what Under Armour (NYSE: UA  ) has done by marketing its high-performance athletic apparel to young athletes, many of whom have remained fans (and customers) of the company as they reached adulthood.

Apple is, however, facing increased competition in the tablet market. (Nasdaq: AMZN  ) recently intro