iPhone Duo opens unpriced growth vertical; potential re-rating to 15-20% growth makes stock look cheap with ~50% upside.

Here's my personal reaction on the Apple iPhone Duo and the latest changes to the iPhone Pro 18. This obviously the 17 Pro Max and how they're trying to sort of compete in the iPad Mini space which we happen to have right here.

In my opinion, that's should you buy it and ultimately what is this going to do to Apple's stock? First things first, let's be very clear just up front about Apple stock. I'm not trying to shill this stock.

I think I only have exposure to Apple in my retirement account. It's not even in my main portfolio or my main exposures.

This stock always goes down on these events. They don't judge the event based on the stock movement during the day. That's a novice mistake. All the traders who got into it already got maximized out on rumors and now they got to cash out. So, old news.

So, you usually get a pop a few weeks before an event like this which you actually did have in the Apple stock. Uh, you know, share price movement. If you go look at the days out, you could see the peak of the stock was actually the day Leopold got liquidated and we never made it back to that.

That was just 5 weeks ago. Kind of remarkable to think. I mean, that almost feels like ancient history right now, but that was only 5 weeks ago.

I'm not trying to pump Apple stock.

makes this less wearable. If I now go into a really important meeting with somebody, am I going to feel compelled to wear the Apple Watch because of the signal that it sends them that uh I got to listen, you know, or or they might be recording everything I'm saying.

Apple just destroyed them. I think they're trying to IPO using their last year's sales because they suspected that Apple was about to kill them.

Apple is now coming out with exactly the same thing at exactly the same interval of heart rate sensing. Now, they're going to measure your normal heart rate more frequently, uh which is great, every 5 seconds.

It used to be 100 seconds, I believe. They'll measure your heart rate, but heart rate variability is now matching the Aura Ring. So, you're kind of now killing the Whoop and the Aura wearable functionality of better sleep tracking, readiness tracking, stress tracking, uh and heart rate variability, which is what goes into these variables, with the new watch.

I do like in the Apple Watch that they're going to have uh you know, faster calm technology inside of it, faster chip sets, for especially unlocking that iPhone Duo, uh and the new iPhone Pro Max 18 and regular 18 will have faster air dropping, which is really useful because air dropping, I don't know what it is, it's gotten really freaking slow.

they're also coming out with the biological age features, which is literally a rip off of the wearables. And they're having a thing where now you don't have to go on exercise outside to measure your VO2.

VO2 generally tracks your GPS, uh, distance moved, and your heart rate, and then they can calculate what they think your VO2 is. Now they have a thing where you can run in place, almost like you're playing the Wii Fit, and it'll measure your VO2.

This whole health app won't be released until later this year, but I thought that was really interesting because it's like, now we're stealing from the Wii Fit, we're stealing from the wearables, and as usual, Apple will probably do it all better.

I do like that the what they probably did with the you know, prior thin version of the iPhone is they utilized the tech in that to help build the Duo because they talk about this aerospace titanium frame and how thin it is.

It's way thinner than the normal iPhone because they've compressed a lot of the chipset into the camera lens area.

I do like the variable aperture that they talked about in the iPhone Pro and Pro Max. That's really useful if you're trying to take like a portrait selfie with a bunch of folks or you're trying to get a good picture with a bunch of people in it.

It's very common that the current iPhone kind of like fades between focus between two different people. So, you're trying to get the nice blur, but then you're blurring one person out and the other and you're kind of like trying to do this to get the shot.

Kind of annoying. That's what they're trying to solve with a variable rate or variable aperture, which is basically how much light the lens actually lets in.

The Duo is the showstopper here though. The you know, do I really care about 20% faster CPU, 40% faster GPU on the Pro via the A22 nanometer chip and having 50% more memory bandwidth or slightly better battery? Not or this variable aperture. Not really.

Is it going to be useful for people who are making like video content that's more than just talking head or generic like my stuff? Sure. But, I think for the vast majority of people the Duo is freaking awesome.

Like the the Duo is great. I think there are a lot of functional purposes for that. Love the idea of like setting it up and having it stand up itself as well and then have its display on that 1 Hz refresh cycle, right?

The always-on display that you have for example on the iPhone, which this just woke up. So, it made it look like it was turning on, but uh it always looks like it's off because it's lying down on a table somewhere.

And so, you know, I see like that sort of angle of it. But, if you could stand it up, you could have more of this sort of laptop that's in your pocket all the time, and you set it up for that always-on display for notifications or whatever. I'm excited about that.

But, I think this was a pretty impressive release for Apple, and I'm a big fan with the majority of this.

There's some features I will turn off or feel uncomfortable using, but that's me. Overall, I think this is a pretty good leap forward. I don't like that the Duo doesn't have Face ID.

That'll come in the future. I'll get over it. I got over it with the Mini ish. I still complain every time. I'm like, "Come on, man. Come on." Cuz if your finger gets sweaty or you get some dirt on it, it's like not as functional as your face.

I don't know, it's annoying. Unlock with watch is fine if you're wearing your watch all the time.

Now, how does this affect the stock? So, the stock itself is not cheap. It's relatively pricey, and one of the reasons it's driven up, in my opinion, is just sort of this pricey element tier, if you will.

It's trading for a 3.69 PEG with 9 and a half-ish percent analyst expected growth average over the next 4 years. You know, this is trading for over a three PEG. Price-to-earnings ratio in the future is over 30, and growth is under 10.

That's over a three PEG when you divide the two. That's pricey relative to other companies you can buy.

But, this could be because markets are anticipating Apple's growth is going to be a lot higher. Myself included. I think Apple will probably grow because of this.

Yes, is the duo going to cannibalize some iPad sales? Yes. But, it's new enough to where your incremental iPad buyer already has like two or three iPads sitting around. They're not excited about buying a new iPad.

They're excited about buying the duo cuz it's something new.

And the phone swap thing does open the potential for people who want to use two phones. One for home, you know, basic, stripped of all the annoying apps and notifications and all the other crap and it's smaller and lightweight.

Uh and then one that has everything that you need for work. The stylus, the full app functionality, you know, whatever else we talked about. I think there are going to be some people who go for that.

And I think that iPhone handoff suite feature and the duo do open up a growth vertical that is not priced into the stock. Even though the rumors priced in, too many people are like, "Oh man, whatever, dude.

Who cares?" Like, "Siri AI, that's that's where the next level of growth is." No. Like, everybody who uses Siri today knows it sucks. And people aren't buying the iPhone or whatever for for that to, you know, voice assistant.

I'm trying not to trigger the name. People are buying it for the hardware. And so, Siri getting better is like by default. We're all like, "Okay, we know. One day it'll be better. It's not good yet. One day it'll be better."

Uh so, I think this actually opens up a new growth uh category. Uh it definitely eats a lot of the wearables market, which is a win for Apple uh via the Ultra 3.

Although, that whole Apple health and AI advisor stuff isn't coming out until the end of the year. That'll be kind of cool. I do like that. I'd like to see Apple's versions of, you know, suggested notifications or suggested workouts or this that or whatever. I do think that's cool.

Uh overall, I'm impressed. This is This event is exactly what I wanted and more. Like the handoff feature wasn't in the rumors. The reality to me that I could set this up as a tripod or to entertain my children while I take photos of them.

Those are all bonuses. The health updates on the watch, exactly what I was expecting.

Uh they are going to lose some iPhone Pro Max users. You know, I'm not going to buy the 18 Pro Max cuz I don't need any more. Maybe I'll get the new thin one, but uh I'll get a Duo.

And I think that's kind of what a lot of people will do. And now all of a sudden you just moved me up from a $1,200 phone buyer to a $2,000 phone buyer. So, you you just increased your revenues on me at the lowest storage level by 66%.

These things are going to have shortages. I think they're going to sell out way faster than people think. And And it's actually very impressive, and Apple's growth is probably going to get written up.

Is it going to get written up to justify a 3.6 bag? Probably not. You know, it's still a rich valuation. We got a lot of, you know, geopolitical concerns, interest rate concerns, you know, all that bull crap or whatever.

But personally, I'm very excited about this. When this re-rates the growth for the stock, you know, if we get to 15%, it's a fair price to buy Apple even today.

If we re-rate this because OpenAI is going and buying all the uh Mac Ultras out there, you know, they could get to the 20% growth, and all of a sudden they're going to look cheap.

Because if I get 20% growth on Apple, here we'll do the actual math on it in just a moment. Uh and then I want to show you some of the other things that this also unlocks. We'll uh we'll pull up their latest uh financial statement.

So, earnings per share that we have on the forecast are $8.83. And forecast growth for the next four years per analyst expectations, 873 next year on EPS, 1128 thereafter, 1079 thereafter, 841 thereafter. Divided by four gets me to 9.8% growth, right?

So, I'm at a $317 stock, let's say, divided by 8.83. That puts me at 35.9 times. It's pricey. But, if I divide Well, if I divide it by nine on a growth scale, you know, I'm closer to a four peg.

I rounded it a little bit there. Uh if I divide it by 20% earnings per share growth because they can jack those margins up, then all of a sudden the stock is only trading for a 1.79 peg.

That, in my opinion, means the stock actually has some upside in it of about 50%. So, if I add 50% to 317 bucks, I'm sitting at almost $500, $476 bucks.

And And this is the kind of stock that, in my opinion, you don't have to buy and worry about are they going to like fail to innovate and go be bankrupt? Are they going to be late?

Yes. But, are they going to totally fail to innovate and go bankrupt and get replaced by AI? No.

This is a great freaking company. And so, I personally am very excited about it. I like the product release. I think it's a creative to what they're doing.

And I believe that as memory costs come down in the future, Apple's actually going to keep these higher price points. And guess who picks that up in margin? Apple. Apple picks it up.

Oh, and somebody now is announcing that uh check the Duo pricing at $3,199 for 2 terabytes. Yeah, I don't think um most people are going to need 2 terabytes. I think that's a little excessive.

Uh I think that some 4K filmers will, but I think they're going to be using the Pro Max. That's that's sort of their you know, target audience there with a variable aperture lens.

But if I go to the settings on the phone that I have, uh I have Well, let's see here. About general about Now, like you Canadian, I got 512. I'm okay with 512. It starts at 256 at 1999.

You know, would I And what's my my load on this? I don't know how full am I. Cuz I Everybody hates running out of space on this crap. I have 143 available. I honestly would probably go for like a 2499 2599 version at 1 TB.

Whatever that actual price is. I could be convinced to go up to 1 TB, but I don't think two is entirely necessary.

So, that's overall my take. Optimistic. I like what's going on here. Obviously, we got you know, there'll be a lot of analyst re-rating and expectations here, but for me, this is this is a fantastic move by Apple.