5 Things That Can Send Apple Moving Higher Again

Updated

After years of thumping the market, Apple (NAS: AAPL) shares have been vulnerable in recent weeks. The stock that peaked at $644 last month to make Apple the world's most valuable company in terms of market capitalization has since shed 18% of its value.

Apple shares haven't been this cheap, on an earning basis, in a long time. The stock closed Thursday at just 11 times this fiscal year's projected profitability and less than 10 times next year's target. Back out the company's $110 billion in balance-sheet greenery, and those multiples drop to 9 and 8, respectively.

No one seems to be rallying behind the valuation argument. Folks are concerned about sluggish Mac sales and the future of iPhone subsidies. The term "iPhone fatigue" is starting to make the rounds, as if it actually means something at a time when iPhone 4S sales remain strong.


Even though Apple's stock is still trading nicely higher year to date, many are asking when this swift correction will pass. No one knows for sure, but let's dive into five things that could send the shares back to resuming their winning ways if they materialize.

1. The iTV is coming
Chatter about a full-blown Apple high-def television -- not to be confused with its Apple TV box -- has been growing over the past year. The allure of an Apple-branded HDTV may seem silly at first. Larger PC makers have tried and bombed in assuming that monitors can be supersized to the point where they're TVs.

However, this is Apple we're talking about.

An iOS-based operating system that would open up the App Store ecosystem to video consumption -- and touchscreen remote controls so folks don't even have to think about smudging the mounted flatscreens -- will be a game-changer in an industry that has been stagnant for years.

Google (NAS: GOOG) tried to beat Apple to the punch with Google TV, but it flopped on the marketing end. The search-engine star also failed to line up the necessary content relationships to justify the purchase of a smart television.

Apple will get it right. It usually does.

2. The iPhone 5 is the coolest, dude
There's a new iPhone coming out in the coming months, and now that the new iPad hit the market as a 4G model, it's time for the sixth generation of Apple's iconic smartphone to play nice with the speedy data network.

You'll be hearing a lot of chatter in the coming weeks and months, and most of it won't be true. Is production really starting next month, hinting at a late summer release? Is the screen about to get bumped to a larger 4-inch display? Is the iPhone ready to embrace NFC chips for enhanced transactional abilities?

Apple always raises the bar on its annual updates, and the stock has historically moved higher on the announcements.

3. Now available at China Mobile: Apple iPhone
There are a few reasons Samsung is selling three times as many phones in China as Apple, but a major sticking point is that the iPhone isn't available through China's largest wireless carrier.

The iPhone simply isn't compatible with China Mobile's (NYS: CHL) network, but there's a good chance that Apple rectifies the situation when the new iPhone hits the market this year, opening the door for some serious market-share gains in the a country that has more mobile customers than the entire U.S. population.

4. Microsoft delays Windows 8
The buzz is building for Windows 8, even though Microsoft (NAS: MSFT) hasn't gone public with an actual release date for its next operating system.

Apple has been able to poke some fun at Mr. Softy's expense in the past, but this isn't likely to be another Vista. Microsoft already restored a lot of its credibility when Windows 7 replaced Vista, and the upcoming update will play nice with touchscreen tablets and portables. If successful, PC sales will regain their swagger after a year of stagnancy. Windows 8 may also crash the iPad party if folks finally have a reason to buy Microsoft-fueled tablets.

Launching an operating system isn't easy, and sorting through the bugs can trip up a release date. If Microsoft has to delay the new operating system or if it's poorly received by early adopters and critics, Apple investors will be able to exhale.

5. The new MacBooks are awesome
MacBook revenue declined in Apple's latest quarter, so it's a good thing a refresh is probably going to hit the market even before the iPhone 5 or possible iTV introduction.

A story earlier this month indicated that Apple may price new MacBook Air portables as low as $799, an aggressive move considering that the original lightweight Air notebooks cost more than twice as much. It's a smart move, especially given Intel's (NAS: INTC) Ultrabook push.

Earlier this year Intel revealed that at least 75 different Ultrabook designs were in the works to be released later this year. Apple is well served by pricing its MacBook Airs at accessible price points, just as it did with the iPads and the eventually subsidized iPhones.

Any of these five events could trigger a rally in shares of Apple. The fact that the stock is ridiculously cheap on a historical (if not hysterical) basis is merely a bonus at this point.

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At the time thisarticle was published The Motley Fool owns shares of Microsoft, China Mobile, Google, Apple, and Intel.Motley Fool newsletter serviceshave recommended buying shares of Apple, China Mobile, Intel, Google, and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributorRick Munarrizcalls them as he sees them. He owns no shares in any of the stocks in this story and is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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