Is Apple Inc. (AAPL) Destined for Greatness (Again)?

Apple has a history of cranking out revolutionary products and then creatively destroying them with something better. It enjoys 90% retention rates among its customers, which is really unique in the history of consumer products. However, the company cannot sustain its high profit margins as the competition in the tablet and smartphone markets forces the company to compete at lower price points. Since the iPhone 5’s release last year, Apple’s stock collapsed due to a combination of supply issues, increased competition, patent lawsuits, executive shakeups, and perhaps most importantly, a concern among investors that the company may not have another breakthrough product up its sleeve.

Despite the negative sentiment currently surrounding Apple’s stock, the company still has a stronger position across smartphones, tablets, and PCs than any of its competitors. That’s a testament to Apple’s ability to create “halos” around its products, which turns first-time Apple buyers into long-term Apple customers. Considering shares currently trade at a P/E around 10, well below its competitors’ average of about 15, Apple stock investors may be dramatically undervaluing the company’s ability to create customers for life.

At this year’s Worldwide Developers Conference, Apple announced iWork for iCloud, a direct competitive volley against Microsoft Corporation (NASDAQ:MSFT) and (to a lesser extent) Google Inc (NASDAQ:GOOG) in cloud-based productivity software. Chipping away at Microsoft Corporation (NASDAQ:MSFT)’s long-standing dominance with Office would go a long way toward eliminating the Windows-maker as a significant competitive threat in the mobile world. More recently, Apple partnered with Time Warner Inc (NYSE:TWX)‘s HBO GO and The Walt Disney Company (NYSE:DIS)‘s WatchESPN to allow its TV set-top box users access to more diverse on-demand content. Even though Apple has come under significant pressure as the mobile space saturates, its shares are still worth looking into at today’s prices.

Putting the pieces together
Today, Apple has many of the qualities that make up a great stock, but no stock is truly perfect. Digging deeper can help you uncover the answers you need to make a great buy — or to stay away from a stock that’s going nowhere.

The article Is Apple Destined for Greatness (Again)? originally appeared on Fool.com.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple, Google, Microsoft, and Walt Disney (NYSE:DIS).

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