I recently bought $16,000 worth of Apple stock, which I covered in a post two days ago. The way the post was written, and based on some of the comments I got on it, may have led to the impression that it was a speculative or uninformed buy. It definitely wasn’t. Firstly, I would not invest that amount of money without doing some real research, following the stock for a while and be comfortable with the company’s outlook. Secondly, I have a medium to long term outlook for the stock and believe it offers the best risk/return in the technology sector, along with Google – another one of my investments. My overreaction in the post was more due to the sudden price drop a few hours after I bought the stock. Luckily two day’s later, the stock is above my purchase price.
What was my reason behind buying the stock? Well, apart from researching the stock (fundamentals and technical), I recently got an Apple iPhone as a birthday gift. I have been using this new generation smart phone for about 2 months and overall am very impressed with it. I have used BlackBerry’s and Treo’s before as well and this smart phone really stood out. Here is a quick review:
- Very user friendly in terms of navigation and usability
- Easy synchronization of music and MS Outlook mail/calender through itunes
- Quick WiFi connection that is easy to use and automatically picks up nearby wireless networks
- Browser navigation by smart phone standards is quite good and screen rotation and zoom in/out are cool features. Definitely has the best browser for smart phones and competitors are scrambling to catch up
- Camera and email functionality have great integration. You can take a photo and email it in 2 clicks
- Even though keypad maybe a bit small, its intellitext feature of completing words for you is quite good
- Can’t copy lines of text. So have to retype everything
- Battery life is not that great, so need to recharge daily. Some reports say the next iPhone model is going to incorporate solar power
- Limited external applications relative to Window or Palm OS based devices. This will change with the release for their full software development kit
- Current iPhone is restricted to AT&T network, though there are various ways to get around this limitation
- Not yet ready for business usage due to limited exchange server integration and other technical limitations. When it is (next model), it is going to be a real threat for competitors RIMM and Palm
Final verdict: 7/10. A great phone, but needs a few improvements.
So why did the current iPhone make me buy Apple (AAPL) stock? Well, because I believe their next model (2.0), which Apple CEO Steve Job’s is announcing/launching at next week’s developers conference, is going to be awesome. I believe Apple will fix a number of the common user complaints (some of which are on my cons list), upgrade the Operating System (OS) and add key new functionality which will make it relevant for both the business and broader consumer market. More importantly, Apple is launching this new 3G capable model in international markets (across multiple wireless carriers) which should be a huge boost for sales; based on most analyst projections.
So there you have it, the main catalyst for why I decided to buy this stock. My target price for this stock is $225 by the end of summer and $250 by year end. From my research and first hand use of the first iPhone model, I think this stock is going to rock.