It's not easy being a cocky Apple (NASDAQ:AAPL) shareholder these days. The same stock that rose every year since 2008 finally proved mortal with a decline in 2015. Apple stock is also trading lower so far in 2016.
I recently reviewed three former market darlings that started the year above $100, only to fall to the double digits. Apple was one of them. It has slipped 9% through the first half of the year, but it's a good trading day or two from reclaiming the triple digits.
Let's go over a few of the reasons Apple has a shot to regain $100 later this year.
1. New products can save the day
Apple doesn't have to fire on all cylinders to be a market darling. The iPod peaked in 2008. The iPad topped out in early 2014. The iPhone and Mac experienced year-over-year double-digit declines in units during Apple's latest quarter, but it's clearly too soon to write off either of those two product lines just yet.
Along the way we have Apple's push into smartwatches, TV streaming devices, and music services. This resulted in double-digit increases in services and other products in Apple's otherwise lamentable fiscal second quarter.
Apple isn't done. It's never been done.
2. Apple can make game-changing acquisitions
Let's forget this Tidal buyout chatter that's starting to bubble up to the surface. Even if Apple overpays for Jay Z's fledgling streaming platform -- and that's just what would happen if the price tag approaches the $500 million that Piper Jaffray analyst Gene Muenster believes it would take to seal the deal -- that's a drop in the bucket.
Apple's balance sheet is flush with $230 billion in cash and marketable securities. A good chunk of that is stashed overseas, but there's still plenty of ammo to work with if Apple should identify companies that can break it from its recent rut where revenue's slipping and profits are falling even faster.
Other tech giants haven't been afraid to strike with big purchases. Apple has gone for bunt singles, with its biggest deal being the $3 billion in Beats Electronics. If innovation doesn't save Apple, acquiring someone else's creations should do the trick.
3. Don't give up on the iPhone 7
Last month was a busy one when it came to analysts who lowered their profit targets.
- Canaccord went from $130 to $120.
- J.P. Morgan went from $125 to $105.
- Goldman Sachs went from $136 to $125.
The good news for our purposes is that all three targets are still on the north side of $100. However, a big reason Wall Street pros have cooled on Apple's near-term upside is the growing consensus that the iPhone 7 won't be much of an upgrade. Apple is toiling in the shadows of 2014's bar-raising iPhone 6 and iPhone 6 Plus, and the market's faith that this fall's iPhone 7 can build on that is teetering.
That's fine. We may not get battery-enhancing OLED screens, and the leading wireless carriers are no longer subsidizing smartphone purchases, but let's not assume we know every reason someone may or may not want to upgrade to Apple's next smartphone later this year.
Apple's down, but it has earned the right not be called out.