When we spoke a few days ago, I noted how my friend “Pete” had passed on recommending Apple Inc. (AAPL) to his Wall Street clients.
This was back in 1997, around the time the late Steve Jobs returned to run the Silicon Valley Legend. Since then, the stock has experienced the kind of gains that can turn $10,000 into $3,433,860.
Today, I have another anecdote to share with you regarding Apple. This one involves a friend I will call “Steve.”
Back in the summer of 2012, Steve told me over lunch that he had recently sold all his Apple stock. He said he did so because he felt that the new CEO Tim Cook would never match the innovation that occurred under Jobs.
It’s possible I need to make savvier friends…just saying…both missed the boat on Apple – and left a lot of money on the table.
Under Cook, Apple has continued its historic run, rising as much as 395.6% in a little more than eight years.
On Solid Footing
Now then, to a certain extent I can understand my friend Steve’s reservations about Cook.
Wall Street and Big Media were discounting the new CEO as someone who would never keep pace with Jobs’ steady output of breakthrough devices.
I told him it was an unfair comparison. Jobs was a pioneering product genius the likes of which we are not likely to see for many years to come.
But I added that the company was in good hands under Cook and the stock would continue to rally.
Mind you, this was not an idle conversation. I have shown repeatedly in our chats here going back more than six years that I am one of the biggest Apple bulls around.
I never bought into the anti-Cook bias that was so popular back then. Not only that, but I made two bold predictions in this column that were widely doubted at the time.
Indeed, I was one of the very first analysts to say that Apple would hit a pre-split price of $1,000 a share. I said that here back on October 30, 2013.
I also made that call as a guest on the Fox Business Network’s show Varney & Co. I thought host Stuart Varney was going to jump out of his chair when I made that forecast on live TV. Click here to see his reaction
The stock reached my target price on March 28, 2017 on a split-adjusted basis when it hit $142.85. It reached its closing high of $270 a share on Dec. 6.
And that brings me around to another bold call I made about Apple under Cook. In April 2015, I said it would go on to have a market cap of a cool $1 trillion. It did so in August of last year.
Committed to Keeping Up
I’m bringing all this up not to boast, well maybe a little, but to serve a larger point. Apple is one of the reasons why I say the road to wealth is paved with tech.
It’s the only sector in the world today where investors can buy just a handful of stocks – and in some cases only one – and become a millionaire.
One of the things I really like about Apple today is that it has reinvented itself once again. Knowing the company couldn’t rely on iPhone sales indefinitely into the future, Cook has shifted the firm’s focus.
Apple has become much more of a services company. With this approach, Apple bills monthly recurring fees for services like streaming music and movies along with cloud computing.
The result is a tidal wave of cash. Apple brings in nearly $43 billion in free cash flow a year. And Cook has been sending a lot of that money back to shareholders.
Since 2012, Apple has bought back more than $234 billion of its own stock. It boasts a return on stockholder’s equity of 56% and pays a dividend of roughly 1.2%
Now you know why I still see plenty of upside ahead. Over the past three years, Apple has grown per-share earnings at 16%. I believe it can maintain that pace for years to come.
Remember, stock prices tend to track earnings growth. That means
Apple could double again in roughly 4.5 years.
At that point, the original $10,000 we’ve been talking about will be worth roughly $6,867,700.
Like I keep saying. If you want to become a stock-market millionaire, you have to be in tech.
And sometimes, the world of outstanding tech wealth can extend even beyond stocks. Tech can be so disruptive that it can even create entirely new asset classes that can achieve record breaking profits.
I’m talking about revolutionary new investments like Bitcoin, which has historically turned some broke college students into multi-millionaires.
And let me tell you, Bitcoin is not done yet. I believe that it is just now entering into a second wave of rising value that will create another wave of millionaires, even billionaires.
I’ve created a special presentation to tell you all about this cutting edge financial opportunity. All you have to do is click here to get started.
And in the meantime, I hope you check back with me regularly as I share the tips, tactics and strategies that can really transform your net worth.
Cheers and good investing,
Michael A. Robinson