Tech fund manager bullish on Apple stock in run-up to iPhone X preorders, but says future ...
Apple stock is prime for a rally in the run-up to iPhone X preorders on Oct. 27, even if there are concerns about the phone and the company in the future, according to one prominent investor.
"[Apple] tends to rally into these product launches," AlphaOne Capital Partners founder Dan Niles told CNBC in an interview. He called it a "pretty predictable pattern," arguing that post-launch, Apple stock tends to struggle for about a month. Shares are said to be outperforming even though analysts are cutting their forecasts.
AlphaOne's positive stance is a "short-term view," Niles noted, since there are worries such as the iPhone X's reviews and how many people will be willing to spend upwards of $1,000 on a phone. In the long term it may be better to own stock in the suppliers providing components for the iPhone X's TrueDepth camera, rather than Apple itself, he said.
Niles's opinion has shifted dramatically in the past year. In May 2016 the investor said he was ready to short Apple, given that iPhone sales were down beyond even shrinking smartphone industry trends, and he felt that Apple hadn't "done a whole lot in services," such as a potential streaming TV offering.
Apple is due to announce its September-quarter results on Nov. 2. The timing of this year's iPhone launches means that only the iPhone 8 and 8 Plus will appear in those figures, which may not look good to investors given softer demand than in the past.
Many people may be holding out for the iPhone X, however, in which case December-quarter results could beat expectations and drive up Apple's average selling price. The device will hit shelves and doorsteps on Nov. 3.
"[Apple] tends to rally into these product launches," AlphaOne Capital Partners founder Dan Niles told CNBC in an interview. He called it a "pretty predictable pattern," arguing that post-launch, Apple stock tends to struggle for about a month. Shares are said to be outperforming even though analysts are cutting their forecasts.
AlphaOne's positive stance is a "short-term view," Niles noted, since there are worries such as the iPhone X's reviews and how many people will be willing to spend upwards of $1,000 on a phone. In the long term it may be better to own stock in the suppliers providing components for the iPhone X's TrueDepth camera, rather than Apple itself, he said.
Niles's opinion has shifted dramatically in the past year. In May 2016 the investor said he was ready to short Apple, given that iPhone sales were down beyond even shrinking smartphone industry trends, and he felt that Apple hadn't "done a whole lot in services," such as a potential streaming TV offering.
Apple is due to announce its September-quarter results on Nov. 2. The timing of this year's iPhone launches means that only the iPhone 8 and 8 Plus will appear in those figures, which may not look good to investors given softer demand than in the past.
Many people may be holding out for the iPhone X, however, in which case December-quarter results could beat expectations and drive up Apple's average selling price. The device will hit shelves and doorsteps on Nov. 3.
Comments
Just a minute while I pretend to make a note of that.
"The best way to predict the future is to invent it"
Just because a stock is underpriced, that doesn't automatically mean the rate of return on your investment in the stock will be subpar. (Especially if it was also underpriced when you bought it.)
1) Capital return program.
2) Outlook for the iPhone business over the next 2-5 years. Is it steady, declining a bit, or growing a bit in terms of units. Is the installed base still growing. ASP expectations. Engagement & relevance. Leadership in new areas.
3) How are the iPad and Mac businesses doing - treading water, growing a bit, or declining a bit? Installed base growth.
4) New or niche product categories - Apple Watch, AirPods, HomePod. How are they doing vs. the competition. What % share in their real target segments (e.g. premium end)? What are the markets for these products, since they are new.
5) Services revenue growth.
6) Apples ability to innovate. Target new areas. Deliver. Ever smaller devices (to target new use cases, like smart glasses).
The quarter to quarter fluctuations of iPhone sales estimates are irrelevant to how the stock will behave over anything more than the next day. However, that is all most look at (I guess it lets them produce an "analysis" in about 2 hours of effort).
Personally, I think Apple will grow over the next 5 years (in terms of top line and profit), but it will be in the single digits per year (on average - some maybe up, some down). They are clearly leading (in fact getting increasing lead) in silicon for computing devices. They are leading s/w wise (as it pertains to 'real' products) in areas like biometrics, AR, wearables, photography and video. I would not say they are far behind in machine learning - they have a very practical, and device centric, approach.