Apple Has More Potential in China Than You Could Ever Imagine

While the Dow Jones Industrial Average hits new all-time highs, one of its larger components, Apple Inc. (AAPL) , isn't too far behind.

At $171.70, Apple stock is less than $5 per share from its previous highs and perhaps a recent analyst note will help give the stock a boost. Highly regarded Morgan Stanley analyst Katy Huberty reiterated her overweight rating on Apple and $200 price target. From current levels, that implies almost 17% upside.

Apparently, recent shipment data suggested that Apple was losing market share in China with its iPhone. However, Huberty disagreed with that point, arguing that Apple "actually leads in share of the active smartphone user base there." Huberty contends that Apple has actually gained ground in the active market share market, which is a more "accurate indicator of strength and potential upgrade demand."

Chinese-branded smartphones have a "shorter replacement cycle than the iPhone" and vendors have "been building meaningful channel inventory of inactivated smartphones," she reasoned.

In essence, while some are arguing Apple's losing ground in China, Huberty is taking the other side, saying that certain data is not as telling of reality. In her words, she believes the iPhone's best days are still ahead in the country. That's good news, particularly for bulls who are hoping for an iPhone super-cycle to carry the stock higher.

Any uptick in demand from China should help propel shares of Apple higher, especially because the country has faded away from the major driver some investors were expecting a few years ago. Increased optimism on this front should be well-received.

Apple is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL? Learn more now.

Apple closed at $171.85 Thursday, up 1.4%, closing near session highs.

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