Forget the iPhone 5, Buy Apple Stock (AAPL)

The past few months have been a frenzy of iPhone 5 and iPhone 4S rumors, which are no doubt exciting.

But even more exciting in the bigger picture is that Apple’s stock (AAPL) was able to recover from Steve Job’s resignation and reach an all time high ahead of the iPhone 5 release.

Read: iPhone 5 Rumor Roundup: Latest on Hardware, Release Date, Carriers)

Apple stock has since settled down to around $405 a share at the time of this writing, but industry analysts don’t expect it to remain there for long. If you are able to skip the iPhone, and buy Apple Stock, you might be able to make a cool profit and pay for your 4G LTE iPhone in 2012 or an iPad 3.

Apple Market Cap Chart

Apple Market Cap Chart for past 5 Years.

According to Chris Whitmore, an analyst with Deutsche Bank, Apple will announce a new aluminum backed iPhone 5 and an iPhone 4S on October 4th, with a release to follow. Whitmore estimates that the iPhone 4S will have a $150 bill of materials, or cost to build, which would translate into a $300 to $350 retail price for the iPhone 4S. This would allow carriers to subsidize the device and give Apple an entry into the mid range smartphone market that Android has a tight grip on.

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Based on this information Whitmore and Deutsche Bank have issued a Buy recommendation for Apple stock and estimates that the combined launch of an iPhone 5 and iPhone 4S will help push AAPL to $530 a share, up over $100 from today.

Why to Buy and When to Buy Apple Stock

By looking at Kyle Conroy’s calculations of “What if I had bought Apple Stock instead?” we are able to see what your investment would have been worth if you had bought Apple stock instead of previous iPhones.

  •  Original iPhone – Price $499 –  Current Value of Stock $1,460
  • iPhone 3G - Price $199 - Current Value of Stock $297
  • iPhone 3GS - Price $199 - Current Value of Stock $375

What’s most interesting to me is that Apple investors often have knee jerk reactions to Apple announcements.

We saw this most recently after Steve Jobs resigned, when there was no iPhone announced at WWDC in June and have typically seen a drop of several percent following Apple announcements. Apple Stock dropped 2% in the hours after the iPhone 4 announcement, and have since risen from around $250 to over $400 — and the iPhone 4 is still a major hit.

There is no guarantee that this trend will continue, but if you have the ability to purchase Apple Stock, you might be able to maximize your earnings by giving the market a chance to react the iPhone 5 announcement before you buy.

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Disclaimer: I am not a financial advisor, and I am not your financial advisor. Please research and discuss investments with a professional that knows your situation. I do not currently own Apple stock.

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