Even after a recent rebound off their lows, Apple's (NASDAQ:AAPL) shares still trade for about 25% below their all-time high of $705. Could they once again soar to such lofty levels? It's certainly possible, and here are five events that could help that happen in the months ahead.
An iPad Christmas
With the new iPad Air receiving very favorable reviews, a recently released version of the iPad Mini now including an impressive Retina display, and the entry-level iPad Mini now priced at an even more affordable $299, the signs suggest that Apple will enjoy tremendous iPad sales over the upcoming holiday shopping season. In responding to an analyst's question regarding iPad growth rates, Tim Cook stated on Apple's conference call, "I think it's going to be an iPad Christmas." I think he's right, and that should bode well for Apple's stock price.
A deal with China Mobile
Apple plans to double the number of retail stores in China over the next two years in an attempt to boost its distribution and to create more brand awareness. But there's another action Apple can take that would probably have an even more significant impact on Apple's sales in this vital market: reaching a deal with China Mobile (NYSE:CHL) to bring the iPhone to its massive network of more than 700 million mobile subscribers. You read that number correctly -- that's more than twice the U.S. population. And while a great many of China Mobile's customers would be unable to afford an iPhone, those who can afford the device can move the needle significantly in terms of Apple's sales in the region and on an overall revenue basis.
Apple's enterprise assault
After gaining a beachhead in the enterprise, or corporate, market segment thanks to the popularity of the iPhone and iPad, Apple is now taking steps to grab even an even bigger share of this massive market. Long dominated by Microsoft (NASDAQ:MSFT) and its Windows operating software, the corporate PC market is now in a state of transition, seemingly away from Microsoft-powered PCs and related devices and toward Apple's ecosystem of products. Forrester Research recently reported that 18% of employees said they use an Apple device for work, up from the 3% range just a few years ago. While strong consumer adoption was responsible for most of Apple's initial success in the enterprise space, the tech giant now appears to be beefing up its ranks with more business sales and support personnel to better attract and serve corporate customers. And Apple recently made its Mavericks operating system and iWork suite of productivity software apps available for free for existing users and new owners of its devices, which many have viewed as a direct assault on Microsoft's Windows and Office-based empire. Apple's aggressive moves into the enterprise sector are a major threat to Microsoft and its partners, and a major profit opportunity for Apple and its shareholders.
A dividend boost
Much has been made about Apple's massive share buyback program, and for good reason. Apple has spent billions buying back huge chunks of its shares, which has already reduced Apple's shares outstanding by about 47 million shares, representing 5% of the total shares outstanding before the launch of the repurchase program. Continued share repurchases will boost Apple's earnings per share and probably its share price, as many investors tend to focus on metrics such price-to-earnings multiples. But Apple's massive cash hoard still checks in at more than $140 billion, and with free cash flow of more than $45 billion over the past 12 months, Apple can easily afford to boost its dividend by 20% or more. Such a move would probably entice income-seeking investors and create excitement around Apple's stock once again.
The Apple TV we've been waiting for
The core of many Apple bears' arguments is that Apple's innovation magic died when Steve Jobs passed away. Probably the best way to prove to critics and investors alike that Apple is still capable of creating game-changing new products is ... to create a game-changing new product. And the most game-changing of them all would be the long-rumored and almost mythical Apple TV. I'm not referring to the Apple TV currently on the market. I'm speaking of the one we've been waiting for that's supposed to completely disrupt the cable television industry. Rumors have been swirling that Apple is attempting to reach deals with content providers that will allow it to offer a premium TV experience that would free viewers from ads and commercials. While the details are still unknown, such a creation would probably meet with strong demand and drive excitement for Apple's ecosystem of products and services, thereby strengthening the Apple halo effect and restoring the shine on Apple's brand.
The Foolish bottom line
Out of the five items I've listed that could drive Apple's share price back above $700, the new Apple TV may be the one for which we wait the longest. But it can't come soon enough. That's because an all-out $2.2 trillion media war over the future of television is being waged that pits cable companies such as Cox, Comcast, and Time Warner against technology giants such as Apple, Google, and Netflix. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave and explains who the real winners will be. Click here to access this free, special investor alert.
Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Fool's Stock Advisor and Supernova premium service teams. You can connect with him on TwitterL @Tier1Investor. Joe has no position in any stocks mentioned.
The Motley Fool recommends Apple, Google, and Netflix and owns shares of Apple, China Mobile, Google, Microsoft, and Netflix. Try any of our Foolish newsletter services free for 30 days. 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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