Tim Cook has promised great things for 2014, and only a quarter of the year has passed, with hot rumours of the forthcoming iPhone 6 and its alleged specs (especially the display size) and iWatch. This helped set the stage for high expectations among investors.
Data compiled by Bloomberg shows that options on Apple stock haven’t been this cheap in more than two years relative to the Technology Select Sector SPDR Fund. Based on the rumours circulating across the investor-sphere, investors are betting on a range of new products this year, and on a sales boom that will keep the stock afloat, according to analyst Andy Perkin of Societe Generale in London.
“We’re going to see quite a bit of new products,” said Perkins, who recommends holding the stock. “Perhaps we’ll see bigger screen phones, we might see more than one phone launched in the year, or one of these big products that so many people talk about: the iWatch or the iTV.”
Their confidence was even backed by Tim Cook when he said that Apple is working on products any reasonable person would consider new product categories. And investors, based on analysts’ recommendations, seem confident on the product categories.
But before that there will be some other updates as well, such as the next-generation Apple TV, which will compete with the Amazon FireTV, Roku, and Google’s Chromecast.
However, analysts project a 6% increase in sales both this year and next, mainly due to the bigger-screen iPhone. This is something that makes people excited, Manish Singh, head of investments at Crossbridge Capital in London, said.
However, besides growing sales, there is another reason, why analysts recommend holding onto Apple stock: share buyback. Apple currently has almost $160 billion in cash, and it is in the middle of a share buyback and dividend plan that will return $100 billion to shareholders.