The iPhone 8 release has come and gone and, while sales are reportedly tepid, it almost doesn’t matter as far as Apple (NASDAQ:AAPL) stock is concerned.
At least not yet.
IPhones haven’t excited investors the way they used to for years. There was a time when Apple’s new product releases were shrouded in secrecy, and the big reveal events featuring the late Steve Jobs provided a 10% to 15% boost for Apple stock in the weeks that followed. That excitement has dissipated, along with the secrecy, both of which seemed to wane not long after Jobs’ death in October 2011. Put plainly, iPhones (and perhaps smartphones as a whole) have become too mainstream and boring. And AAPL stock has become boring along with it.
AAPL Needs More Than iPhones
Though it has recovered quite nicely after a down year, the Apple stock price today is only 17% higher than its May 2015 peak. For AAPL to truly rejoin the ranks of the market’s great growth stocks — a list that includes Facebook Inc (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL), which have popped an average of 86% in the last two years — Wall Street will need to see something new. Moves into self-driving cars and streaming video are apparently in the works, but those could be years down the road. In the meantime, the latest iPhone alone hasn’t compelled investors to start snatching up AAPL stock en masse again.
After topping $164 a share in early September, Apple stock dipped as low as $150 before bouncing back slightly in the last couple weeks. Perhaps that will be the start of a nice little rebound for the stock. The accompanying iPhone X release later this month probably won’t add to it much, at least in the short term, but the Nov. 2 AAPL earnings report could. The bigger catalyst might not be until the holiday earnings report comes out in late January or early February, since that will give investors a clearer picture of how sales of the new iPhones are really going.
But until Apple drops another true new product bombshell on us, AAPL stock will have to be content with small victories. If you already own the shares, that may be enough for you. But at a time when stocks are flourishing and the market is at all-time highs, there are better opportunities for high long-term returns out there — namely from the three tech blue chippers I mentioned earlier.
Low Risk, Low Ceiling?
Apple stock remains a perfectly fine investment. If you still own AAPL or are considering buying shares, you’re not likely to lose money on it anytime soon — not with 8% earnings growth expected this year and a 22% EPS jump forecast for 2018. After a rough patch, the stock has stabilized.
But for AAPL stock to keep pace with the likes of Amazon, Google and Facebook in the coming years, it will need much more than an endless wave of sparkling new, slightly upgraded iPhones to attract investors.
Better innovation is the key to reinvigorating AAPL stock. Not more iPhones.
As of this writing, Chris Fraley did not hold a position in any of the aforementioned securities.
