Apple (AAPL) Reclaims $500 On Icahn Remarks

Shares of Apple (AAPL) rallied last week above $500 for the first time since January, after famed activist investor Carl Icahn publicly called the stock "extremely undervalued" after meeting with CEO Tim Cook. On Twitter, Icahn disclosed that he had a "large position" in Apple, which was estimated at $1.5 billion by the Wall Street Journal. The recent rally helped Apple reclaim its top spot as the world's most valuable company by market capitalization.

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Icahn suggested that Apple could increase its share buybacks substantially and push the stock back up past $700, an all-time high it hit last September. Apple has already committed to spend $100 billion on share buybacks and a higher quarterly dividend through 2015. Increased anticipation for the company's upcoming release of the iPhone 5S and a lower-end iPhone in September also contributed to the bullish sentiment building behind the stock. Another bullish catalyst was Apple's patent victory over Samsung on August 9, after thee International Trade Commission ruled that Samsung infringed on two Apple patents -- one for its multitouch touchscreen and another one for its headset plug detection. The commission also ruled that Samsung did not infringe on four other patents claimed by Apple. The ruling, part of over a dozen patent litigation lawsuits between the two companies, bans Samsung from importing or selling any of the devices that infringe on the patents -- which currently only includes older devices such as the Galaxy Tab 7 tablet and the Continuum smartphone. However, the broad reaching ruling could hit other Android manufacturers who use the patented technology. Another bullish catalyst on the horizon is a possible deal with China Mobile (CHL), China's largest wireless carrier. China Mobile has refused to carry the iPhone due to Apple's steep purchase commitment agreements -- which require wireless carriers, like Verizon (VZ) and AT&T (T) , to promise to sell a quota of iPhones or buy back the difference. Verizon recently found itself in that trap, possibly owing Apple $14 billion for unsold iPhones due to the rising popularity of Android handsets. However, analysts expect Apple to back down and either lower or eliminate the purchase commitment agreements in order to finally tap into the lucrative Chinese market. Analysts believe that it is a critical time for Apple to strike a deal with China Mobile, since the government is set to hand out 4G licenses to the country's carriers. The iPhone 5S is expected to be optimized for 4G networks worldwide. Although Apple appears fundamentally undervalued, trading at 12 times forward earnings with a 5-year PEG ratio of 0.7, many investors are concerned that the company's product pipeline will dry up soon, and that it does not have true successors to the iPhone and iPad, which make up roughly 75% of the company's top line. Other News About AAPL iPhone 5S In Gold, How Will It Look? Is a gold iPhone coming? Apple Stock Surges After Billionaire Carl Icahn's Tweets Icahn boosts Apple stock. Other Stocks in the News Which of These Biotechs Can Beat the Bird Flu? Will these companies tackle H7N9? ACloserLookatThreeCompaniesFocusingonMyelofibrosisTreatments Which of these companies will treat myelofibrosis the best? Copyright 2013 by, Inc. InvestorGuide has no control over the sites we link to, is not affiliated with these sites, and cannot take responsibility for their quality or suitability. The news, analysis, commentary and profile information is not meant to be comprehensive, and the data provided is not guaranteed to be accurate. WebFinance Inc., the publisher of this newsletter, is not a registered investment advisor or a broker/dealer. This is not a stock recommendation newsletter but rather a source for investment ideas, and we encourage you to fully research any company before considering investing. The opinions expressed herein are those of the author and do not necessarily represent the views of nor are they endorsed by WebFinance Inc. No employee of WebFinance has owned or currently owns any shares in the company described above. The above is neither an offer nor solicitation to buy or sell any securities. The trading of securities may not be suitable for all potential readers of this newsletter, and the purchase of stocks mentioned in this newsletter may result in the loss of some or all of any investment made. We recommend that you consult a stockbroker or financial advisor before buying or selling securities or making investment decisions. We are not responsible for claims made by advertisers and sponsors. Anyone who makes decisions based on what they read here does so at their own risk and cannot hold WebFinance Inc. (DBA, Inc.) or its employees responsible.

Published on Aug 19, 2013
By Leo Sun
Leo Sun
Leo Sun is a freelance finance writer and position trader. He focuses on a combination of value and momentum investing, with a strong interest in the trading philosophies of Warren Buffett and Peter Lynch. Leo also has experience writing articles to help small business owners acquire loans and manage their finances. He regularly contributes to the Stock of the Day analysis.

Copyrighted 2020. Content published with author's permission.

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