Investors should be seriously looking at putting more money into Apple stock, says one industry analyst. Robert Cihra of Caris & Company is predicting that Mac market share will grow by 26 percent in 2010, compared to only a 16 percent expansion in the general computing industry.
Cihra predicts in a new research report (PDF download, requires registration) that Apple will have a 4 percent overall market share in the year 2010, which is actually around what it has now, according to numbers released in September. Apple’s pricing and profit model, however, give it a 10 percent share of worldwide revenue. Despite not seeing growth in terms of overall market share, Cihra still thinks Apple is the best stock available in the personal computing market.
The report, as described by AppleInsider, sees Mac unit sales growing because of things like pricing and product line control:
Cihra goes into great detail on his analysis in a note issued to investors Thursday morning. Due to Apple controlling its own product cycles, as well as pricing, he believes Mac units will grow at a rate of 1.6 times faster than the entire PC market. On average, the Mac has outpaced the PC market as a whole by 1.8 times over the last 12 quarters.
In the report, Cihra also explains why Apple remains the best stock choice for investors interested in the computing sector:
As the most (in fact only) innovative, highest-value (hardware+software) and profitable PC vendor, we estimate Apple having earned a Mac [average selling price] of $1,289 in CY09, down 10% [year over year] but still representing a premium of 1.8x vs. its Wintel peers. Even more meaningful, we estimate Apple Macs generating a gross profit-per-unit of nearly $340, which is 2-3x our estimate for its peers, keeping us focused on AAPL as the single best PC market investment.
Apple’s success is due to a number of factors, but one in particular is the way in which it predicted the dominance of the notebook well before it had achieved that position with consumers. The price of Apple’s notebooks fell below those of its desktop offerings in around 2005, a full two years before the same thing happened at HP, one of the largest PC manufacturers. Many consumers these days, if they have only one computer, choose a notebook because while performance has caught up to desktop machines, portability and battery life in laptop computers have made significant gains.
While Cihra doesn’t seem to mention it, if Apple does indeed release a tablet in 2010, and if it can price it reasonably, as recent evidence seems to suggest it will, there’s no telling what kind of gains we could see. If done well, Apple would essentially be creating a new market, which could provoke an uptick in its fortunes the likes of which we haven’t seen since the introduction of the iPod.