The Key Questions to Ask About Apple

NEW YORK ( TheStreet) -- Apple ( AAPL) remains one of the most debated stocks among investors. Today let's consider some key questions about the company.

1. Can Apple Continue to Innovate?

This is one of the biggest questions surrounding the stock. The assumption that Apple won't be able to continue to has been a drag on the stock for some time. Still, I think it's too early to question whether the company has lost its creative touch.

Historically, Apple takes years -- not months -- to bring new products to market, and often it isn't the first company to bring a specific type of product to market. Before the iPod, other companies were selling MP3 players. Before the iPad, there had been attempts to market tablet computing devices. And before the iPhone, there were plenty of smartphones. The company's strategy hasn't been trying to be first. It's been trying to be best.

Wouldn't it seem unlikely for Apple's innovation to cease? I mean, management hasn't taken the stance that it's the king of tech and that nothing can improve in the way that BlackBerry ( BBRY) did when it dominated the world with its handheld devices.

As long as the company does not adopt a passive approach, its innovation will continue. Whether it's iTVs, iWatches or a product we haven't yet imagined, there will be something.

The big question will be whether the product is any good. Wall Street needs to realize Apple doesn't release a new product every few quarters or each year. It releases a new product when it's ready to do so. Apple has continued to prove it doesn't wait on anybody but itself.

To be frank, Apple is slow when it comes to new products. But that's just how it goes. Investors who want growth can look elsewhere until new products come along. But until that potential growth returns, Apple has solid cash flow, a nice dividend yield, and a rock-solid balance sheet to keep it afloat.

2. Do the iPhone 5s and 5c Even Matter?

I've heard that the new phones mean nothing, are pieces of crap and are no different than the iPhone 5. I've also heard the argument that most of the new iPhone purchases are simply upgrades by existing iPhone owners, with few purchases coming from first-time iPhone owners.

It's simply not true that the 5s is not a significant upgrade. Although I don't own a 5s, the new fingerprint sensor is the first I've seen that actually works on a smartphone, and the device itself is lightning quick.

The graphics are great and by all measures, it seems like a solid device. The one argument that could be made is the screen size, depending on what side of the fence you fall on. Personally, I'm not a fan of so-called "phablets."

It remains to be seen whether the new iPhones have the potential to pull in Android users, but Apple doesn't necessarily need them. Now before everyone fills the comments section up about how great the Nokia ( NOK) Lumia and Samsung Galaxy are, it's imperative to remember that iPhone users love their iPhones, and that isn't going to change anytime soon.

With a near-90% retention rate, Apple has left current iPhone users with clear, limited choices for upgrading after it eliminated the iPhone 5 from its lineup.

There are plenty of users who still have the iPhone 4 or 4s. Now they have three choices: Stick with their current phone; buy a different, non-Apple phone; or upgrade to a 5s or 5c.

Based on studies, (and not simply my own opinion), a majority of current Apple customers will likely stay customers. In other words, the 5s or 5c will be their next phone.

3. Are Apple's Best Days Behind It, and Should I Buy the Stock?

These are tough questions to answer.

It's also hard to say whether Apple will ever take out its highs of more than $700, because that depends on what sort of products it introduces in the future. If the new products are lame, or even if they just lack that "got-to-have" factor, then it very well might not see $700 anytime soon.

But given its innovative past, deep ecosystem, and strong share buyback program, I certainly wouldn't rule out a return to that level and possibly higher.

There are some very strong growth names with solid technicals and fundamentals that investors can put their money to work in instead of Apple. Google ( GOOG), ( PCLN), MasterCard ( MA) and Starbucks ( SBUX) are just a few examples.

Apple definitely isn't worthy of being called a growth stock anymore. Those looking for growth should go somewhere else, perhaps to the names mentioned above. But Apple would certainly qualify as a value stock.

Its valuation is dirt cheap, it has a safe and secure dividend yield of about 2.5% and the stock has potential. But many investors want growth now, not the potential for growth later.

Also, sentiment, up until recently, has been incredibly bearish, which could be a good contrarian indicator. Look at Yahoo! ( YHOO), Best Buy ( BBY) and Netflix ( NFLX), which were all hated just a year ago.

Bottom line: If you want growth and consistency now, sell your Apple stock and find something else. Presently, there are fewer catalysts and far too much drama to deal with vs. other stocks that continue to make new highs.

But if you're looking to buy a company that's closer to the bottom than it is to the top, has arguably the best financials, and could possibly achieve near-explosive growth once again, then Apple is a stock for you -- so long as you're willing to wait.

At the time of publication, Kenwell held shares of MA, SBUX, AAPL.

-- Written by Bret Kenwell in Petoskey, Mich.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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