The Apple Stock Forecast article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.
- The average one-year price target for Apple’s stock at TipRanks is only $319.86. Apple deserves a price target of at least $330.
- Apple is still hiring. Factories in China are back to normal operations. The ongoing pandemic is no longer a disruption to Apple’s business.
- Buying AAPL is still judicious. This stock is reasonably priced and has obvious long-term upside potential.
- Apple’s affluent customer pool can endure COVID-19’s financial headwind. Many of them will still be able to afford a $399 or $1,500 iPhone.
- The big surge in video game activities during this pandemic is a big tailwind for AAPL. Apple is also one of the biggest paid streaming entertainment companies.
Apple (AAPL) announced it would reopen some of its retail stores in the United States. This is a strong incentive for investors to add more to their AAPL holdings. Apple’s online store is great but physical Apple stores are still very efficient movers of iPhones. Sales from its own website and retail stores account for 31% of Apple’s total revenue. I know that without reactivation of Apple’s retail stores, AAPL would continue to trade sideways below $320.
Apple is a safe long-term investment because it is an expert direct sales marketer. Almost a third of Apple’s $260.2 billion annual revenue is from its online/offline retail selling. The reactivation of Apple’s retail stores in the U.S. is largely why I have a one-year price target of $330 for AAPL. Yes, this is higher than the average PT of $319.86 at TipRanks.
I am relying on the predictive algorithm of I Know First to keep me well ahead of Wall Street analysts. As per the predictive AI of I Know First, AAPL is a strong buy because of its very bullish one-year forecast score of 217.17. Compared to the collective projections of Wall Street analysts, I have more faith in the AI algorithm of I Know First.
Why Apple’s Retail Stores Matters
The reopening of some U.S. Apple stores could help realize JP Morgan’s FQ3 prediction that Apple will sell 22 million iPhone units. The iPhone still accounts for almost half of Apple’s revenue. This is why Apple promptly reopened all of its 42 retail stores in China last March. Despite the COVID-19 pandemic, many customers still prefer to touch and feel (manual evaluation) new smartphones at physical stores before they make a decision. Real-world test-before-buy is something that no online store can offer to potential buyers.
Apple now offers iPhone models that cater to a wider variety of budgets. It will be easier to convince people to buy the new 2020 iPhone SE for $399 if they can physically evaluate it first. There are flagship-level Android phones that sell for less than $399. Apple built its own retail shops to make sure potential buyers will be tempted to visit. People coming to Apple stores will consequently test smartphones and laptops on-site. The high-quality design/construction of Apple’s hardware products needs to be touched or felt by people. This is how Apple seduces its customers toward buying its high-priced products.
Apple Is Now Pandemic-Resistant
We should have more faith in Apple’s management. Tim Cook and friends are not whining about the ongoing pandemic. In fact, Apple is still hiring. This goes to show that in the real world, Apple is very confident it will prosper even if the COVID-19 becomes a permanent threat to our daily lives. Foxconn’s factories in China and Taiwan are back to normal operations. Apple’s retail stores are reopening. There is no more risk than the iPhone or iPad’s supply chain will be disrupted.
More importantly, the core affluent customers of Apple remain a moat. Yes, there are many people who are losing jobs due to pandemic-induced furloughs and business closures. However, the usual crowd that buys iPhones and Mac computers are not among those who are losing jobs or taking pay cuts. The U.S. chart below shows the coronavirus impact is most affecting the livelihood of African-Americans and Hispanics.
Going forward, the middle-class and upper-class citizens of the world can still afford to buy $1,500 iPhones. These people are the ones who are working from their homes. They are not getting laid-off at all. If you look at the ethnicity of flagship iPhone owners in the U.S., most of them are white and Asians. They are mostly college-educated with well-paying jobs.
Apple’s long-term prosperity when you take into account that its customers are among the world’s top-earning households. The chart below explains why Apple never made $200 iPhones.
The chart above also hints that Apple’s Services segment will continue its double-digit sales growth. Affluent people who can afford pricey iPhones are also the best customers when it comes to paid video/music subscriptions. They are also the best spenders on in-app purchases. The rapid growth of the Services segment is why Apple is now less dependent on iPhone sales. Think of Apple now as an entertainment company that caters to moneyed people.
You should buy more AAPL because this company’s non-hardware business segment is now doing $13.35 billion in quarterly sales. Apple’s stock will soon breach $330 partly because of its impressive Services segment.
Any business decision that improves the marketability of iPhones is a great reason to go long AAPL. This iconic smartphone brand still accounts for half of Apple’s annual sales. The reopening of U.S. retail stores should help Apple maintain positive annual revenue growth. Like it or not, forcing billions of people to stay at home means they have more disposable income. The rich cannot do pricey vacations/travels due to COVID-19. Ergo! They are just going to buy pricey iPhones, Macs, and iPad Pros instead.
Those rich individuals might also invest in AAPL. This stock is still cheap when compared to its software & hardware peers. The market still has less appreciation for AAPL than MSFT or GOOGL. Apple’s stock continues to have lower valuation ratios than Microsoft and Google. There are bigger profits to be made by buying stocks that are not getting a fair valuation.
Past Success with Apple Stock Forecast
I Know First has been bullish on the Apple stock forecast in past predictions. The I Know First algorithm issued a bullish outlook on November 21, 2019. The algorithm forecast successfully predicted the movement of the AAPL stock and rose by 18.94% after three months. See the chart below.
Here at I Know First, our AI-based algorithm has modeled and predicted assets price movement worldwide for short-term and long-term time horizons, ranging from 3 days to a year. Since 2011, we have been providing an Apple stock forecast, as well as daily machine learning stock prediction dollars predictions, forex forecasts, gold price predictions, and, in particular, Apple stock news. Today, we are producing daily forecasts for over 10,500 assets. These algorithmic trading software forecasts generated by our quant trading tool are used by institutional clients, as well as private investors and traders to identify the best investment opportunities in the market.
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