Does Apple Inc. (AAPL) Still Have Upside Potential?

appleBrad Hoppmann: Apples aren’t always red. Apple Inc. (NASDAQ:AAPL) looked all green today (Tuesday) as shares moved above $100 and approached an all-time high.

Can AAPL keep moving? One Wall Street analyst has eight reasons to think so.

Green Apple

Apple has obviously been an amazing stock to own over the last few years. Adjusting for the recent stock split, the shares that broke $100 today were around $12 when Steve Jobs unveiled the iPhone in January 2007.

Since that time, holding on to Apple looks great in hindsight, but you would have had to sit through some uncomfortable downturns. Shares fell 40% from their last all-time peak, which coincided with the iPhone 5 launch in 2012.

April 2013 turned out to be the key bottom and the rest is history.

The next key date will be Sept. 9, 2014.

In July, Apple notified the media that it would hold an event on that day. Everyone assumes it will be the iPhone 6 launch, but the company has yet to confirm all the many rumors you see all over the Internet.

Does Apple still have upside potential? I believe it does. So does Katy Huberty, the analyst who covers Apple for Morgan Stanley (MS). She just issued a new report on Apple with eight reasons to stay bullish. Here they are:

  • Institutional ownership is significantly lower now than 2012.

  • Apple has significantly increased shareholder return with dividends and share repurchases.

  • Analysts continue to increase their Apple estimates higher.

  • The Apple executive team added several new stars since 2012.

  • Higher research and development spending predicts major new product launches.

  • Apple is using strategic acquisitions to add talent and intellectual property.

  • Gross product margins recovered from a downturn and are set to widen further.

  • Apple’s online services like iTunes now contribute significant and growing revenue.

The second reason deserves a little explanation. Cash-rich companies like Apple don’t always pay impressive dividends, but they reward shareholders in other ways.

This year, Apple will spend about $31 billion buying its own stock on the open market. That’s on top of the $11 billion in dividends it will likely distribute.

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