Apple Inc. (AAPL) has already had a great run in 2017, with shares up nearly 50% so far on the year.
But don't sleep on the stock in 2018. At least, that's according to Citi analyst Jim Suva. He reiterated his buy rating on Apple stock and said shares can climb to $200. That's approximately 17% upside from its Tuesday close near $171.
So how exactly is Apple going to add to its massive run over the next 12 months? Luckily, Suva provided a reason -- or more specifically, he provided five reasons.
iPhone "super cycle"
For starters, Suva says the iPhone "super upgrade cycle" will continue throughout the next calendar year. The launch of the iPhone X had very limited supply at first, and the hope by many investors is that as supply constrictions ease, unit sales will increase. It's pretty clear that the iPhone 8 and iPhone X are fan favorites, though.
Suva reasons that the continued super cycle is the top reason Apple stock will have legs in 2018. However, tax reform certainly won't hurt, provided Congress can pass the new tax bill. A lower corporate tax rate and the repatriation of overseas cash is certainly considered a positive catalyst for Apple, Alphabet (GOOGL) , Facebook (FB) , Microsoft (MSFT) and many other U.S. companies.
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Growing high-margin services revenue, increased spending from enterprises on Apple products and services, and an attractive valuation are three other reasons Apple stock should continue higher in 2018. Suva points out that Apple still trades at a 20% discount to the S&P 500 despite having impressive sales and earnings growth, alongside a fortress-like business.
Apple stock is higher by 173.22% in early Wednesday trading. Although, part of that rally could be from its $390 million investment in Finisar (FNSR) . Apple's investment is intended to create jobs and increase production speed and R&D. As a result of the investment, Finisar stock is jumping 24.75%.
Apple, Alphabet, Microsoft and Facebook are holdings in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, FB, MSFT or GOOGL?Learn more now.
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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.