Apple's Stuck Stock Frustration Will End With Innovation

By Sean Udall  DEC 01, 2011 1:15 PM

The iPhone and iPad literally changed end markets, proving that the single greatest thing Apple can do to move the stock is continue to innovate.


Sean Udall is the author of the TechStrat Report, a tech focused newsletter. The following is a free sample. Take a free trial!

It seems that everyday the blogosphere/print media and TV media is awash with mounting ideas as to how Apple (AAPL) can move the stock.  I'm going to say right now that I think most of them are flat wrong. 

Valuation is already crazily cheap and the company has a prodigious cash hoard.  However, cash in and of itself isn't going to push a stock higher.  Valuations are not going to push the stock higher -- if so the stock would have moved much more than it has. 

The most frequently mentioned item for Apple to consider is a stock dividend.  I for one don't think a cash dividend will do much to boost the shares -- at least not in a sustainable manner.  Just see Microsoft (MSFT) as a great example of this.  And a special dividend?  Apple, please don't waste the cash in this manner.      

The single greatest thing Apple can do to move the stock is continue to innovate, just as the iPhone and iPad literally changed end markets. Here are the chief things I believe Apple can do to help propel the stock to the $500s and beyond:
Lastly, I would add that a stock split could do wonders here.  Usually this sort of thing doesn't matter, but history shows that with truly unique growth stocks, a well-timed stock split can provide a powerful catalyst.  All one has to do is look to Baidu's (BIDU) stock split in early 2010 to see such an effect.  So my recipe for Apple is five parts innovation and one part financial engineering to create a potentially huge move in the shares. 

Position in AAPL

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