10 Reasons Why Apple Is Still on a Tear

Remember when people were wondering if Apple had lost its mojo? Following the loss of Steve Jobs, the maker of the Mac, iPhone, and iPad went a bit adrift, and investors were left wondering if the company would ever return to form.

Now Apple is hotter than ever, as evidenced by its most recent quarterly earnings report, which showed the best results of any corporation in history. Apple recorded a profit of $18 billion in its most recent quarter, with revenue of $74.6 billion. That's a gain of about $1 per share over the same quarter the year prior. Shares of Apple [NASDAQ: AAPL] have risen about 8% in the last month.

Apple is back, and there are plenty of reasons to believe it will remain one of the world's best-performing companies through 2015 and beyond. Here are 10 of the main drivers of Apple's success now and down the road.

1. The Brand

Last year, Apple was named the world's most admired company by Fortune magazine. There's little reason to think it won't be high on the list again this year. Interbrand's rankings of best global brands also slotted Apple at number one, valuing the brand at $118.9 billion, a 20% rise over 2013. When you have a brand as well-known and popular as Apple, your products practically sell themselves.

2. The iPhone

Apple sold a staggering 75.5 million iPhones in the last quarter of 2014, surpassing even the most optimistic estimates of many analysts. The iPhone now has a 15% global share and is the best-selling phone in China.

3. The iWatch

Smart watches aren't new, but consumers have been waiting patiently for Apple's entrance into the category. The iWatch was first revealed last September to considerable buzz and is expected to go on sale this spring. It has an estimated price tag of more than $300, making it another high-margin product that could revolutionize a category and immediately be a formidable competitor to FitBit, Jawbone, and Nike Fuelband.

4. The Mac

The company reported 5.5 million sales of its computers in the last quarter, representing a 14% year-over-year increase. The company is not as dependent on Mac sales as it once was, and the Mac operating system makes up about 5% of the market compared to more than 90% for Windows. But Mac computers are high-margin products and very helpful to Apple's financials. Expect good results from a new line of MacBook Air laptops this year.

5. The iPad

Sales of the Apple tablet slid by about 15% in 2014, and analyst projections for this year aren't great. But the iPad was still the top tablet on the market in 2014, comprising a 27.6% market share. The decline in iPad sales was largely due to a decline in tablet sales overall, and competitors Samsung and ASUS saw their sales drop even more than Apple's. It's possible that the iPad will comprise a smaller chunk of Apple's revenue moving forward, or the company could blow consumers away with its next version. Don't count out the iPad's role in Apple's well-being just yet.

6. The Apple Television

There have been rumors of this product for a while, and it's anyone's guess as to when (or even if) it will be produced. But Apple's success with the retina display on computers and tablets has many consumers salivating over a potential high-definition, Internet-enabled television from Apple. Given Apple's success in creating great consumer products for computing and music, one can expect an Apple television set to be high-quality, easy to use, and with a healthy margin. Even the speculation about an Apple television is probably helping the company's stock price a few points.

7. The Beats Music

No one is entirely sure what Apple plans to do with its billion dollar acquisition of Beats Electronics, but the company has been praised for recognizing the potential of a streaming music service. Sales of media from Apple's iTunes have been sagging, but Beats offers the avenue for Apple to compete with the likes of Spotify and Pandora, which offer streaming music for a monthly fee. And Apple is so well capitalized that we should not be surprised if Beats streaming service is priced better than competitors, at least initially. Beats also has a high-end headphone business that should bring in additional revenue.

8. The Mountain of Cash

Apple has nearly $180 billion in cash or bonds, which is larger than the market capitalization of some big companies, including Amazon and Disney. Analysts and investors love to guess what Apple plans to do with all its money, but anything the company does will probably be helpful to investors. It could spend it on research and development, which would benefit the company down the line. It could perform a share buyback or distribute a nice dividend. Or it could make some strategic acquisitions.

9. The International Growth

The United States makes up less than 5% of the world's population, so it makes sense to look outside our borders to find customers. Apple said that 65% of its revenue in the most recent quarter came from international sales. That's up from 60% in the fourth financial quarter last year and 59% the quarter before that. Revenues were up 70% over the year in China, 20% in Europe, and 8% in Japan, according to TechCrunch.

10. The Mess at Amazon

One of Apple's chief competitors is Amazon, the online retailer that has also made entries into the smartphone and tablet space. By most accounts, Amazon's launch of the Fire Phone was a disaster, and the company reported a $170 million charge in the third quarter due to its lack of sales. Amazon also saw its tablet sales drop 66% in 2014. Amazon's products aren't bad, but they haven't been selling, and that's good news for Apple.

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Guest's picture

Interesting look here. I like a lot of people wondered what direction Apple would head in after Steve Job's passing. It's good seeing spelled out how they're doing. I can't wait to see the iWatch, though it's going to need to be a lot cheaper before I can get my hands on one!

Guest's picture

Apple is fortunate to have multiple cash cows in the iPhone and iPad that help its cash hoard grow. The company could easily fund multi-billion dollar blue sky projects like driverless cars and 3D printers, and it will still have money enough left over to build their dream-like new corporate headquarters.