Will Apple Investors See Strong Returns in 2016?
The outlook in Cupertino is bright and sunny, and that's not just because it's in California. It's where Apple (AAPL) - Get Report is headquartered, and the company has been going strong, and there are clear indications that it will continue to do so.
How clear? Take the new iPhones, for instance. The 2015 first weekend sales for the iPhone 6s and iPhone 6s Plus were the best for any rollout in Apple's history. And that's expected to expand, as customers in 130 countries will be able to score the device by year's end.
But Apple is not counting on iPhone sales alone. The company is working on "more and better" in several areas. As such, investors should see continued gains.
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The iCar Is on Deck
Not satisfied with dominating the smartphone market, Apple has been making headway into the field of electric cars. Hoping to develop breakthrough innovations, the company is being secretive about research, plans and manufacturing.
New Apple hires include specialists in electric batteries and artificial intelligence. Rumors of a "smart windshield" are intriguing, though its form and function remain unknown.
Apple Pay Is on Its Way
Apple Pay, the company's mobile payment and wallet service, is already in the United States, United Kingdom and Canada. Australia will likely be on board later in 2015. The next year's expansion plans include Spain, Singapore and Hong Kong.
Apple Pay is already set up at many retailers in the U.S., such as Aeropostale, Toys "R" Us, Whole Foods, The Disney Store and McDonald's. The list of American retailers and supporting banks is growing, but international growth will be necessary for it to outperform rival services, such as Samsung Pay and Google's Android Pay.
Apple Watches Are on Wrists
Though not initially embraced by all, the Apple Watch was a hotter item during its first quarter than iPads or even iPhones were when they first appeared. Among wearable devices, the Watch quickly rose to challenge the number one Fitbit, which shipped 4.4 million units in the second quarter of 2015. At 3.6 million, Apple's watch was not far behind.
And the Watch does so much more than track activities, which is Fitbit's purpose in life. Apple's functions include controlling music, paying retailers, responding to email and taking phone calls. Projections for the Watch's sales suggest an almost 25% growth rate over five years.
The Pros Are on Board
Hedge fund legend David Einhorn dramatically increased his shares in Apple during fall 2015. Apple was already more than 20% of his limited portfolio when he increased it by half.
Einhorn's no slouch in the investment world. He foresaw the disbanding of the Lehman Brothers financial services firm in 2008. The man knows his way around the market.
The iPhones Have It
Let's finish with one more look at Apple's signature product. At the end of the 2015 September quarter, Apple earned 94% of the world's smartphone profits. The previous year, it was 85%. If the trend continues, Apple might corner the smartphone market within a few years.
This is based on price, not units. Samsung, Apple's closest smartphone competitor, had just 11% of profits in the quarter but sold 25 percent of the phones. iPhones accounted for less than 15% of the purchased phones. However, Apple's average price per unit was more than three times that of Samsung's.
The Future Is Promising
Apple's
was almost 43%. Though that's likely to be significantly less in 2015, the outlook is better for 2016. The following years are also encouraging, as Apple continues to refine its existing products and move into new areas of technology. There does not seem to be any real bruising on this Apple.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.