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Apple Is Not Properly Discounting Much Stronger iPad Air Sales

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One slight chink in even the most ardent bull theses on Apple (NASDAQ:AAPL) (including mine) has been accepting lower iPad sales and just thinking that the iPad will still be great, but become more of a replacement cycle/strong cash flow generation story.

It turns out even us uber bulls might have to put a little luster back on the iPad franchise. As this iPad Air is literally flying off the shelves.

I've gone to my nearest AAPL store 3 times in the last week, all in off hours, and it's nearly impossible to get any DEMO time at the iPad station.

Thus this iPad is getting strong sales from two sources... those that already have an iPad and want a new one and those that don't have an iPad, but likely have an Android Tablet. A possible third category is strong buying from those without a Tablet, but I didn't think there was anyone on the planet in that category anymore.

If this sounds familiar... it should. It's exactly why the iPhone 5S is so strong. It's getting great heat from iPhone upgrades. But I believe it's drawing some Android users back to iOS... that is exactly what happened to me.

And yes, I still want that larger screen, but I'd forgotten just how much better a device experience was on the iPhone vs. even my Moto Razr or Nexus devices - which are still the class of the Android ilk.

Frankly, I don't hear an ounce of enthusiasm about the Android channel anymore. It's simply become an acceptable low cost alternative. And in what is the best consumer research available... I get gym talk about how great the iPhone 5S is. I get yearning talk from those that say "I can't wait til I'm off contract". I "WANT" that new iPhone! I haven't heard anyone say, Yowza I really want that new Android. In fact, just the opposite... like "darn it (substituting stronger verbiage), I really wish I hadn't bought this _______ Android".

Bottom line, the Air is flying off the shelves and I expect it do so for some duration. AAPL has stalled ever since reporting a truly great quarter, and has yet to be rewarded for it. On top of that, the stock hasn't gotten any juice from this stellar new iPad Air and how strong the sales are. My view is simply, substantial upside is being held in reserve.

I think once we get past the Twitter (TWTR) IPO, AAPL shares could see yet another powerful catchup move.

Sean provides in-depth analysis, strategies and trades across the technology sector in his TechStrat Report. Take a FREE 14 day trial.

POSITION:  Position in AAPL.