Is It Time For An AAPL Rally?

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Apple's Cash Machine. Bullish on AAPL

Apple’s Cash Machine. Bullish on AAPL

An AAPL Rally is long overdue

Just about three months ago on July 23, Apple’s common stock (AAPL) closed at $418.99 a share. Since that recent low, AAPL has been on an upward trend. Sure, it has bumped up against resistance from time to time as it tried to push past $492 per share. But last week, as the markets whipsawed back and forth as the Washington Soap Opera Turned, Apple not only passed $492, it kept on climbing.

Discount the two day spike caused by the Carl Icahn tweets which saw AAPL pop up to nearly $514 as share. That was pure emotion and not based on Apple’s fundamental strengths. Don’t get me wrong. Icahn huge purchase is a very Bullish move on the part of the ‘Raider Trader.’ It’s just that the driving force behind this climb is clearly the iOS family of products.

The launch of the two new iPhones has been a spectacular success. iPhone 5S is selling faster than Apple can produce them. Fully 64% of Apple’s iPhone sales since the launch on September 20 (preorders for iPhone 5C began on September 13) are iPhone 5S models. 27% have been iPhone 5C. iPhone 4S accounts for the remaining 9%.

64% have purchased iPhone 5S since September 20!

64% have purchased iPhone 5S since September 20!

The dominant success of iPhone 5S in the product mix has not gone unnoticed by Wall Street. Reports are surfacing that Apple is scaling back production of the iPhone 5C models at the same time the company ramps up for heavier iPhone 5S demand as the iMaker is set to expand availability to a total of 62 countries as of November 1, 2013.

This should have a very positive impact on Apple’s overall gross profit as the company enters the crucial Christmas holiday shopping season. This is due to higher margins and bigger revenue/average selling price associated with the iPhone 5S. It also points to the consumers’ preference for high quality over a lower price point. This is bearing out even in China where iPhone 5S is dominating sales figures.

For a look back at what made Apple’s rebirth possible, read more.

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