Apple (AAPL) Stock: The Secret Smartphone Blueprint

By Ray Blanco Aug 17, 2017, 11:44 AM 

Apple AAPL - iPhone

Apple’s (NASDAQ:AAPL) original iPhone kicked off a revolution in personal electronic devices — raking in huge profits for its investors and forcing its competitors to innovate.

Now history is poised to repeat itself on or around Sept. 8, 2017, when Apple is expected to introduce the iPhone 8.

But this time, I don’t think Apple investors will be the biggest beneficiaries.

The fact is while Apple is still great at changing the game, its days of exponential growth are behind it. The company is so large and established that the best it can hope for is incremental growth.

That doesn’t mean you can’t still see big gains from the next iPhone release — far from it. To find them, though, you have to look below the surface.

Some of the iPhone’s most critical components come from third parties. While those manufacturers may not have Apple’s name-brand recognition, they are poised to receive a nice share of Apple’s cash flow. And even if their parts don’t end up in the next iPhone, there are good reasons to believe Apple’s competitors will call on them instead.

How Smartphones Can (Still) Make You Rich

Apple released its original iPhone in the summer of 2007. The company already had a devoted following for its computers and music devices. Its new phone was packed with useful features and heavily hyped.

Success was practically a no-brainer.

Investors who had faith in Apple’s first phone made nearly 10 times their money in a decade.

Now, with the 10th anniversary of the iPhone, you better believe that Apple wants to prove that it’s still a relevant innovator. It’s getting ready to announce its latest version of the iconic smartphone, and there is no doubt in my mind that the company is installing all sorts of new tricks into it.

Technology news reporters and analysts are hard at work speculating what next-generation features it will include. Apple’s devotees are likely already making plans to camp out for the new phone. And investors are expecting Apple’s stock to jump from all the sales the company racks up.

But for savvier investors, Apple is not the way to play this. As I mentioned earlier, the company is too big and too expensive today. Consider that to match the gain Apple saw after the first iPhone’s release, the stock would have to rise 75% in the next six months — up to $262.50 a share.

Peeling Back the Layers for Massive Gains

There’s just no way that will happen, even if the iPhone 8 is a smashing success. Over the past five years — which has seen the release of three new iPhones and minor variations — the stock has averaged gains of just 13.5% a year.

So if you want to grab big profits from Apple’s next iPhone, don’t focus on what it will do, but how it will do it. Many of the iPhone’s critical components come from third parties — firms with proven track records of delivering to Apple’s high standards.

More importantly, many of their stocks trade for a fraction of Apple’s current price. If Apple mentions a single one of these firms in their iPhone 8 announcement, I expect their shares to go through the roof.

And since you’ll be able to get in at such a relatively low price, your gains could easily eclipse what you’d see by investing in the larger, more established manufacturers.

As the Apple supply chain reveals itself, I’ll be right back here with some great new ways to ride the iPhone wave.

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