I love pessimists.
They help the rest of us make gobs of money, especially when it comes to a company like Apple Inc. (NasdaqGS:AAPL).
Shares are up 56% this year alone and on their way to another double.
Just not for reasons you might think.
We talk about Apple Inc. (NasdaqGS:AAPL) frequently, with good reason.
As of Monday, shares were up 56% year to date putting them within striking distance of the double – a 100% winner – that I told you was highly likely at the beginning of the year.
Then, as now, many investors are worried about a pullback and they cite everything from China-related fears to falling iPhone sales as “proof” that their fears are well founded.
Good luck with that.
Prices stood at around $145 this past January when I made my forecast… after a 5% drop in revenues to only $84.3 billion the prior quarter … after net income declines 0.5% to just $20 billion for Q1 and after a shock warning from the company itself that Apple would miss its own estimates for the first time in 15 years.
They’re now at $242.98 a share.
Had you bought in with $1,000, you’d now have $1,540.
$5,000 would be worth $7,700.
$10,000 … $15,400.
If you missed out, don’t worry.
Analysts focused on yesterday’s metrics will hand you a second chance, possibly even today when Apple reports earnings.
The news cycle is overwhelmingly negative at the moment which is why I want you to ignore any chatter you hear about why the company’s seen “better days” and why “knowledgeable investors should look elsewhere.”
Wall Street’s insiders know better. Apple is one of those precious few companies you buy because of the much bigger picture at work.
A picture that we’ve repeatedly identified a year or more in advance of the mainstream press.
CEO Tim Cook is shifting Apple in ways that ensure that the company will grow exponentially.
First, Apple is moving into medical devices where the margins are simply outrageous. That means everything from the Apple Watches people know now to patents filled for smart sheets that can tell how well you’re sleeping to health data itself. Moving into healthcare all but guarantees increased penetration of its devices into new demographic groups.
The medical market in the United States alone may be 3 to 5X the global iPhone market to put things in perspective. Global healthcare spending is already 10% of global GDP at roughly $7 trillion.
Second, Apple expects to report 500+ million paid subscription products by 2020 including a wide range of “must-have” services that draw customers in by enveloping them in all things Apple. Examples include Apple News, Apple credit cards, Apple+ television and more. That puts the company on track for at least $14 billion services revenue along by 2020 at the latest.
Bundles of Apple products are next, mark my words.
And, third, the iPhones are a springboard for “installed base” growth – meaning the potential to cross-sell everything now tops 1.4 billion installed devices. This will really come into its own a few quarters from now when the installed user base begins buying “related” products, services and wearables.
Speaking of which, I actually think the iPhone numbers most analysts poo-hoo on a regular basis will be stronger than expected despite there being no 5G capability yet. In contrast to most folks who think this is a screwup on Apple’s part, I think it’s a stroke of genius because Apple will let other phone companies work out the kinks… before debuting a 5G enabled devices that may ignite another 200 million or more upgrades in 2020.
So now what?
Tactically speaking, I think Apple’s naysayers are going to come out in force by the time you read this and that the news cycle will jump on anything even remotely negative as an excuse to sell. Consequently, I expect a short, sharp dip.
You can use that to your advantage know what you know about the longer term picture.
I suggest selling the AAPL January 17, 2020 $225 Put (AAPL200117P00225000) option as a way of making a little money.
They’re priced at $4.85 per contract right now which means you’ll receive $485 for every contract sold, today, and you’re going to have to have $22,500 on reserve ready to buy 100 shares for each put option you sell if you’re exercised.
Basically, you’re getting paid to go shopping for AAPL shares at a 7.35% discount to where it’s currently trading.
If you’re not options savvy or don’t like the idea of having shares “put” to you, consider using a one of my favorite Total Wealth Tactics, the “LowBall Order“ to accomplish the same thing.
Either way, get “in to win.”
Until next time,
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