Bullish Case for Apple Inc. (AAPL)

That’s despite the fact that iTunes radio is estimated to contribute only half of a percent to revenue.

Nevertheless, most analysts don’t believe iTunes Radio to be a large threat for Pandora.

Competition

Yes, it is absolutely true that Google Inc (NASDAQ:GOOG)’s Android OS is dominating in market share around the world, and Android has progressively gotten better. Google Inc (NASDAQ:GOOG) and Samsung are Apple’s biggest competitors, and are in the process of eroding Apple’s margins. To be sure, Google got the best of Apple in maps as well, but Apple’s product, like Google Inc (NASDAQ:GOOG), will get better the more it is used.

However, Apple still dominates the cell phone market in terms of profitability. Also, in terms of parallel investing, one must look at Google Inc (NASDAQ:GOOG)’s 0% yield, and shares trading at a 27 P/E ratio. This indicates that Wall Street is expecting serious growth from the company, and a downside miss could send the stock spiraling downward, whereas with Apple, diminished expectations are priced in. Of course, for Pandora Media Inc (NYSE:P), overall listener hours came in at 1.25 billion for June 2013, a 17% increase from 2012, but that’s off from May 2013’s 1.35 billion hour total. Pandora’s overall share of radio listening also decreased between May and June, dropping modestly from 7.29% to 7.04%.

Does this mean that Apple is late to the party in a crowded field? Will Apple loyalists bother to switch their listening preferences?

Final thoughts

Apple is incredibly cheap, valuation-wise, and from that standpoint it seems like Wall Street is pricing negative growth into the share price. With cash on hand and a high yield, creating a sort of floor for the company’s shares, and diminished expectations creating an environment where an earnings beat will send shares rapidly higher, we have created an environment where there is more upside than downside.

Additionally, as I suggested, I believe the Street is completely ignoring Tim Cook’s repeated references to game-changing products in Apple’s pipeline.

For all these reasons, I consider Apple a “buy.”

Margie Nemcick-Cruz owns shares of Apple and Google. The Motley Fool recommends Apple, Google, and Pandora Media (NYSE:P). The Motley Fool owns shares of Apple and Google. Margie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article The Bullish Case for Apple originally appeared on Fool.com is written by Margie Nemcick-Cruz.

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