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Apple Is A Safe, Valuable Long-Term Investment

by I Know First Research

The new iPhone was announced during Apple’s September event last week, offering few advantages over the previous model. While the camera has been improved and a new operating system is included, the upgrade pales in comparison to the one announced last year, when the larger screened phones were unveiled for the first time. The company is relying on loyal Apple customers that have not upgraded their older iPhones to keep sales numbers growing, as CEO Tim Cook has claimed multiple times that a large percentage of the original sales last year were from customers switching over from other companies in response to the larger screen.

If this proves to be the case or not will have a huge impact on Apple’s performance next year, as investors will look for continued strong sales of the company’s flagship product. Apple has set extremely high standards to meet moving forward, and the current economic climate in China could cause the stock price to suffer moving forward. However, other projects that Apple is currently working on make it worthwhile to continue buying Apple stock, especially during any further dips in the stock price. The entrance into new markets, as well as the emphasis being placed on markets it will look to capitalize on further, will lead to future growth, while the company’s large cash holdings make Apple a rather safe investment.

Apple Stock Predictions 1

Apple TV

For years, the Apple TV has just been a hobby for the world’s largest company, but Apple is now ready to play a major role in the future of the television market. Rumors for most of the year have been that the company would offer a live-streaming service of a slimmed down package of channels for a substantially cheaper price than traditional cable packages. However, this is not the product that Apple unveiled at its September event.

Instead, Tim Cook said the company believes that apps will be the future of television. While other companies have attempted to integrate this type of technology before into customers’ viewing experience, it has not been able to catch on. However, Apple has a penchant for correctly timing when to jump into markets and popularize them with larger markets. In order to do so with the Apple TV, the company is counting on a few things to take place, which should be watched closely moving forward.

One key will be getting old users of the Apple TV to buy the newer version. The first version of the device was released in 2007, but sales were slow until more recently when the streaming trend started to become more prominent. This could prove to be difficult, as the new device will still have the same content as older versions, as it only makes it simpler to do so. In addition, a number of users have other devices for streaming already. In order to get users to upgrade, Apple is hoping that the new apps convince users they need the new device.

Apple TV

Much of the presentation for the Apple TV was focused on gaming capabilities, with a new Wii-like remote making the device extremely interesting for casual gamers. Apple announced that certain video game favorites among casual gamers like Disney Infinity and Guitar Hero would be released on the App Store, making it extremely easy for users to buy the games and play. Beyond this, it’s not yet clear how app developers will take advantage of the new App Store for the Apple TV. Apple is hoping that they will be able to do so, as the success of the new device is dependent upon it.

Moving forward, the ability to add a streaming-cable package could be made easier if the Apple TV proves to be popular, as it will give Apple more negotiating power moving forward. Currently, CBS is planning to bring an all-access app to Apple TV that will allow users to watch all of its programming for a small, flat monthly fee. This would still require a cable subscription, but is still a step in the right direction. If this hobby of Apple’s can become a strong generator of revenue moving forward, the company’s stock price could skyrocket.

Apple Cash

Due to the incredibly strong sales of the iPhone, which Apple is able to sell at a premium price, the company has a rather large cash position. Its cash pile actually increased to over $200 billion. This makes the company an extremely safe investment, as the company has quite a cushion to withstand any issues the company might face, such as the recent news that the company’s apps in China were hacked with malicious software.

Further, this position could allow the company to enter into completely new markets, such as the rumored Apple car. The company is rumored to be working on its own electric car, with the project being codenamed Titan. While this project is in the very early stages and will not be ready for at least a few years, it still shows the power of the large corporation, as Tesla has recently been worried about the impact Apple’s entry into the market could play on it.

This is prospective at this point, but the cash holdings could play a large role for young investors looking for a future source of income. While Apple is clearly looking for ways to invest its cash into new ventures such as the Apple car, Tim Cook has proven to be more willing to return value to shareholders than Steve Jobs was when he was CEO of the company. Apple currently has a dividend yield of just 2%, but this number could jump over the next decade.

Dividend

Since the company reinstated its dividend in 2011, it has increased the dividend by an average of over 11% annually. Further, the company announced in 2014 that it planned to continue increasing its dividend annually moving forward. Based off of its track record with the dividend, it would make sense that the dividend could more than double moving forward, perhaps within the next six years. With an extremely reasonable P/E ratio of roughly just 13.2, Apple is a safe investment for young investors, especially during the current dip in the stock price.

Algorithmic Analysis

I Know First supplies financial services, mainly through stock forecasts via their predictive algorithm. The algorithm incorporates a 15-year database, and utilizes it to predict the flow of money across 2000 markets. The self-learning algorithm uses artificial intelligence, predictive models based on artificial neural networks, and genetic algorithms to predict money movements within various markets.

The algorithm produces a forecast with a signal and a predictability indicator. The signal is the number in the middle of the box. The predictability is the number at the bottom of the box. At the top, a specific asset is identified. This format is consistent across all predictions. The middle number is indicative of strength and direction, not a price target. The bottom number, the predictability, signifies a confidence level.

I Know First has had success predicting the movement of Apple’ stock price in the past. In this one-year forecast from September 19th, 2014, Apple had a bullish signal strength of 28.67. In accordance with the algorithm’s prediction, the stock price increased 13.36% during that time.

Apple Stock Predictions (past)

Having explained how I Know First’s algorithm works, it is worthwhile to see if the algorithm agrees with the bullish fundamental analysis of the company. The three-month and one-year forecasts for Apple are included.

Apple Stock Predictions (most updated)

A positive signal strength does not mean investors should automatically buy the stock. Dr. Roitman, who created the algorithm, created rules for entry for a stock such as Apple. Using this trading strategy, an investor should buy a stock if the last 5 signal strength’s average is positive and if the last closing price is above the 5-day moving average price. When both of these conditions are met, it is a good time to initiate a position in the stock.

Conclusion

Apple has a bearish signal strength over the near-term, which makes sense considering some of the company’s struggles in China. However, the company should rebound and start increasing over the long-term as the struggles in China are addressed, and the company’s safe position leads to thriving earnings reports moving forward. Continue buying this stock before earnings reports, as Apple remains a great investment choice, even for future income investors.

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I Know First is a financial services firm that utilizes an advanced self-learning algorithm to analyze, model and predict the stock market. Co-Founder Dr. Lipa Roitman, a scientist, with over 20 years of experience created the market prediction system. The algorithm is based on artificial intelligence, machine learning and incorporates elements of artificial neural networks as well as genetic algorithms to model and predict the flow of money between 2,000 markets from 3-days to a year: stocks, ETF's, world indices, gold, currencies, interest rates, and commodities. The algorithm outputs a predicted trend as a number, which in turn, is used by traders to identify when to enter and exit the market. While forecasts can be used for intra-day trading, the predictability tends to become stronger over longer time-horizons such as the 1-month, 3-month and 1-year forecasts. Visit us at iknowfirst.com

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