Apple is reinventing itself before our eyes – and that makes AAPL a strong buy

“Just when seemingly everyone was ready to give up on Apple, it shocked everyone by soundly beating earnings expectations,” Bob Ciura writes for Seeking Alpha. “The market was clearly taken by surprise, as Apple stock jumped 7%. Apple has been challenged by several headwinds this year. Apple is in-between the iPhone 6 and iPhone 7. The strong U.S. dollar is weighing on sales and profit. And, if that weren’t bad enough, there are worries over slowing economic growth in China, which is a major emerging market.”

“It is for these reasons that Apple consistently trades for a low P/E,” Ciura writes. “Apple’s persistent cheapness is certainly frustrating for investors, who are wondering if and when Apple will ever again trade at valuation multiples on par with the broader market.”

“Apple’s surprising earnings beat is the result of a key change in strategy, which has gone relatively unnoticed. It is transforming itself from a hardware company that can only grow with a new iPhone 6, 7, etc., to a company with recurring revenue growth,” Ciura writes. “This may seem minor, but Apple’s change in strategy this year will be critical to the company breaking the chains of a hardware company, and earning a higher valuation.”

Read more in the full article here.

MacDailyNews Take: In other words:

It’s the ecosystem, stupid.

10 Comments

  1. Products man Products. Except for the operating system and maybe the Watch, iPad and Apple TV, I’ve not seen much the last couple of years. Yes Apple has worked on the phone but is that all Apple can do with it’s time and money? The Mac produce line is old, professional products seem to be forgotten about, and only talk about innovation is in fashion. I would settle for updating the existing produce lines to current technology. I never thought I would say that.

  2. The “Can’t innovate my ass” mantra from Phil Schiller needs to mean innovating correctly, especially in the markets each device or computer serves. Innovation that merely miniaturizes without considering need or advantages is folly (aka 2013 Mac Pro). I hope September sees more than just an iPhone 7 being introduced.

  3. Speak for yourself, Mr Ciura. I, for one, was never ready to give up on Apple. And there are many long-time Apple investors who feel the same. Apple is focused, innovative, and disciplined. They know where they came from and where they are going. They do not forget those who stood in their way. (Ahem, Samsung.) I don’t care what any analyst, pundit, and talking head says — not one of whom has anywhere near the proven track record and stellar growth Apple has demonstrated.

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