My Money Is on This King of Technology
May 22nd 2012 7:10PM
Updated May 22nd 2012 7:14PM
Last summer, I took a giant leap of faith. Instead of suggesting where to invest and then never revisiting my original thesis, I pledged to put my own money behind 10 stocks. My goal was to build the World's Greatest Retirement Portfolio. Almost one year through, and the portfolio is dominating the S&P 500 -- outperforming the index by 18 percentage points!
Today, I'm happy to state that after almost a year, I'm just as bullish on one of those 10 -- Apple (NAS: AAPL) -- as I was a year ago. I'll show you how my pick has performed, why I'm still bullish, and what I see moving forward for the company. At the end, I'll offer you access to a special free report that has three more ideas for the perfect retirement portfolio.
Revisiting my thesis
In what was a sad omen of things to come, I led off my original buy recommendation with a cautionary caveat: "Quite possibly the biggest drawback when investors look to Apple is the health of CEO Steve Jobs."
The loss of Jobs was a shock to the world and does have serious ramifications for the company moving forward. The ability to produce the next "it" gadget was one of the two reasons I invested in the company, and though I think Jobs played an integral role in developing such gadgets, I'm giving Jobs' attempts at institutional greatness the benefit of the doubt for now.
The other major force driving my decision to invest with the company was the enormous potential abroad. Not only did the company do well domestically, but international sales have also been astounding over the past two quarters abroad.
Net Sales Increase
Operating Income Increase
Source: Apple SEC filings. Percentages rounded to the nearest whole number.
This has helped create a situation where, had you invested $4,000 at the time of my original recommendation, you'd be sitting on a gain of more than $2,700, as opposed to the S&P 500's flat performance, even factoring in dividend reinvestment.
Why I'm still bullish
But patting myself on the back for the past year won't do any good moving forward. I believe Apple still has tons of room to grow and further industries to disrupt.
Research In Motion (NAS: RIMM) once had a chokehold on the business-smartphone industry, but I fully anticipate that this advantage will slowly deteriorate as businesses rapidly adopt iPads. Having one's smartphone and tablet on the same operating system makes all the sense in the world -- and there's little RIMM can do to stop this.
Apple's opportunity in the smartphone category is still huge among consumers, too. It doubled its market share over the past year, but iPhones still command only 7.9% of the world market -- far behind leaders Samsung and Nokia (NYS: NOK) .
And when it comes to operating systems, Apple is increasingly in a two-horse race with Google's (NAS: GOOG) Android platform.
|Operating System||Q1 2011 Market Share||Q1 2012 Market Share|
|Research In Motion||13%||7%|
Source: Gartner. Worldwide smartphone sales. Market share rounded to nearest whole number.
Internationally, Apple's iPhones are being outsold by Samsung 3-to-1 in China, but that discrepancy could soon disappear. The company is rumored to be working with China Mobile (NYS: CHL) to make the next iPhone iteration available to the masses.
You know where I'm putting my money, but if you want further investment ideas for your retirement portfolio, I suggest you check out our latest special free report: 3 Stocks That Will Help You Retire Rich. Inside, you'll get the names of three stalwart business that promise to be dominating their fields -- and rewarding shareholders -- for years to come. Get your copy of the report today, absolutely free!
At the time this article was published Fool contributor Brian Stoffel owns shares of Apple and Google. You can follow him on Twitter, where he goes by TMFStoffel.The Motley Fool owns shares of Apple, Google, and China Mobile. Motley Fool newsletter services have recommended buying shares of Apple and Google, and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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