Stock Madness 2006: Apple's Got Game, Baby!

The following article is part of The Motley Fool's "Stock Madness 2006," based loosely on the annual NCAA College Basketball Tournament, a.k.a. "March Madness." Throughout the competition, our writers and analysts will engage in head-to-head competition. You, dear readers, are the fans and referees -- after you read these exciting duels, your votes will determine who moves on to the next round of play. The writer who survives the tournament will be our champion and most valuable "coach."

But please, make no mistake -- "Stock Madness 2006" is a GAME!

No other player in my lineup, or anyone else's lineup for that matter, has as much superstar power as Apple Computer (NASDAQ:AAPL). The other four players on my team are winners, too: Investors have already declared Guess? (NYSE:GES), Avid Technology (NASDAQ:AVID), and Dress Barn (NASDAQ:DBRN) to be gamers; their respective stocks have blown away the market over the past three to four years. And after an in-depth investigation of Texas Roadhouse (NASDAQ:TXRH), I can see why Mad Money's Jim Cramer was so high on this restaurateur -- it, too, will be a champ in the coming months. But if I need a game-winning shot, there's no other company that I would rather have holding the ball with the clock ticking down than Apple.

The computer maker has already cornered the market for portable digital-music players with the iPod-iTunes duo. In fewer than three years, users have downloaded more than a billion songs from iTunes and have given the company more than an 85% share of the MP3 market. Over the next 18 to 36 months, Apple will continue its dominance with the launch of new products like an improved iPod video player and iPod nano. It has inked a deal to make the wildly popular Daily Show With Jon Stewart available to iPod users -- a move that strikes fear into other traditional content providers. And no need to worry about cell phone manufacturers trying to cross the Apple moat -- rumors of a new phone set to launch next year that includes photo, video, and iTunes-enabled MP3 capability will put an end to any Cinderella comeback stories from other digital-music providers.

The greatest promise of all, however, is Apple's desktops. Nonsense, you say? Consider that from 2002 to 2004 -- pre-Intel-based Apples, pre-super-cool iMac, pre-Mac mini -- Apple's market share was less than 3% of the overall market but was already trending upward. Now add the iPod effect as well as its industry-defining iMac G5 and Mac mini, and it's no wonder that in 2005, the company's desktop unit sales shot through the roof with 55% growth from the year ago period. Expect this rapid growth to continue. Innovative products and the company's Apple Stores, of which there are only a hundred-plus, will continue to create frenzy among consumers, and that, in turn, will lead to a market-crushing investment over the next 18 to 36 months.

Alyce Lomax's rebuttal
I have to wonder whether Apple is my opponent's only major contender for a slam dunk. Dress Barn and Guess? may be doing well lately, but they face loads of competition in fickle fashion. And Avid Technologyspooked investors last quarter on profitability. If Apple stumbles -- and some think it's likely -- then I wonder whether the rest of Jeremy's team may lose a lot of game.

Is Team Apple the champ, or can Alyce's consumer-friendly lineup steal a victory? Let us know by checking out Alyce's team and then casting your vote.

Fool contributor Jeremy MacNealy owns shares of Apple Computer. Alyce Lomax does not own shares of any of the companies mentioned. The Motley Fool has a disclosure policy.