Ok. I may not be the first person to point this out, but Apple Inc. (NASDAQ:AAPL) is pretty cheap at 10 times trailing earnings. But a low P/E ratio isn’t enough. Investors must identify a potential catalyst to justify a higher multiple. Apple Inc. (NASDAQ:AAPL) needs to dangle something new and shiny in front of analysts to get them excited about the stock again.
Fortunately, Apple has several potential catalysts in every quarter of 2013 that can drive its share price higher.
In its most recent quarterly earnings, Apple Inc. (NASDAQ:AAPL) reported that its cash pile reached a record $137.1 billion. Currently, the company pays a $2.65-a-share quarterly dividend, with the stock yielding about 2.4%.
Many analysts believe the company could hike its dividend in April. Conceivably, Apple Inc. (NASDAQ:AAPL) could double its payout with little impact on cash available to finance operations. If Apple were to shell out such a massive cash distribution, it would push the stock’s yield north of 4%. Like feeding candy to a child, any dividend hike would provide a quick sugar rush for Wall Street.
Summer Product Releases
Of course, a healthy diet requires more complex carbohydrates. Analysts want to see new products that can propel revenues and profits higher.
The company recently refreshed its product line, with modest updates expected in 2013, including new chips and software updates. These efforts will begin to appear in Apple Inc. (NASDAQ:AAPL)’s first- and second-quarter financial results.
Rumor mills are buzzing about several upcoming handset releases:
iPhone 5S
: Expected to be launched in June, the follow up to the iPhone 5 will feature multiple color options and be available in two different sizes.
Low-Cost iPhone: Ealier this month, the Wall Street Journal reported the Apple is preparing to release a cheaper version of the iPhone. The move would allow Apple to penetrate emerging markets where cheaper handsets are more prevalent.
iPhone Math
: There’s also speculation that Apple is developing a new-larger screen smartphone which could be released in 2014. The new phone takes direct aim at the Samsung Galaxy featuring a larger 4.8-inch screen display.
Fall China Mobile Ltd. (ADR) (NYSE:CHL) Deal
It was widely reported that Apple CEO Tim Cook met with China Mobile Ltd. (ADR) (NYSE:CHL) executives last week, indicating that a deal with the carrier may be back on the table.
Apple has struggled to gain a foothold in China primarly due to competition from Google Inc (NASDAQ:GOOG)’s Android operating system. While Android lost its No. 1 spot in the United States last month, the platform has dominated the Chinese smartphone market. Last year, sales of Android-powered devices increased 260% year over year. Android grew its market share by 19%, now accounts for 72% of all device sales in the country.
Why has the Android OS been so much more successful in China and other emerging markets? The platform’s ad subsidy makes handsets significantly cheaper for price-sensitive customers in developing economies.
While it would appear as if nothing can stop the Android onslaught, a deal with China Mobile could reverse the iOS’s market share slide by giving Apple access to a 700 million-subscriber base and up to 65% of Chinese smartphone customers.
