If you’re near the beach, I want you to head out there.
Now listen closely.
That’s the tsunami of cash headed to our shores thanks to the corporate tax cuts President Donald Trump signed into law last month.
It’s also the sound of you getting rich.
That’s because the biggest the beneficiaries of that tidal wave are investors in Silicon Valley-style technology.
See, American firms hold hundreds of billions in overseas profits – and these new business tax cuts are motivating them to bring it all back home.
Data I’ve seen shows that 11 of the top 16 firms that will repatriate foreign cash are in high tech or healthcare – two of our biggest profit targets here at Strategic Tech Investor.
And the single biggest winner here will be Apple Inc. (Nasdaq: AAPL) – and its investors.
Well, I’ve got a brand-new Apple share-price prediction.
And whether you’re a longtime Apple shareholder – or are just considering buying AAPL for the first time – I think you’re going to like it.
Let’s take a look…
$250 or Bust…
Apple is right now stashing more than $250 billion overseas – where it’s avoiding the United States’ pre-Trump heavy tax rate. (And just $39.1 billion will go toward taxes once it comes back home.)
That’s the kind of war chest virtually every other company in the world can only dream about.
Now I have a something of a history for making bold calls when it comes to Apple.
Way back on Oct. 30, 2013, I was one of the first to predict that Apple would hit a pre-split share price of $1,000. As a sign of how far “out there” that kind of call was at that time, Fox Business host Stuart Varney nearly jumped out of his chair when I repeated that forecast on his popular show, Varney & Co.
That call wasn’t just bold – it was accurate.
The stock reached my target price, on a split-adjusted basis, when AAPL hit $142.85 on March 28, 2017.
So, at the time, those of you who followed my advice on the occasion of my first prediction had made 93.1% gains – and beat the S&P 500 by nearly threefold – in well under four years.
Right now, Apple is trading around $175 – meaning you’re sitting on 134.1% gains – and more than doubling the S&P’s return over that stretch.
With that wave of cash coming Apple’s way – along with all the innovations it’s got going on in the lab – now is the time for my next big call.
This time, I’m forecasting its share price will hit $250 – putting its market cap well over $1 trillion – in the next 30 months.
Here’s how it’ll get there…
Billions and Billions
Even after Apple pays its tax bill, it will clear an impressive $210 billion.
On top of the massive wave of cash coming back from abroad, don’t forget that Apple also generates around $90 billion in adjusted earnings each year.
That’s a lot of cash to support a whole range of wealth-creating moves.
- Fully $30 billion of that will go toward cutting-edge R&D over the next five years. This investment comes on top of the $12 billion that Apple already puts into R&D each year. So Apple will be able to keep on developing a whole new round of category-busting devices and services.Apple has been at the leading edge of consumer electronics innovation for two decades. And this bold move ensures it will stay there.
Plus, Apple has said that new spending will lead to 20,000 or more new high-paying jobs – right here in the United States.
- Another $5 billion will go into Apple’s advanced manufacturing fund. These dollars will help other U.S. firms enhance their production skills. And that means more components in Apple’s devices will be made right here in America. Apple also aims to build a second major corporate campus to house many of its future growth forays.
- And up to $150 billion could go toward shareholder-friendly programs like buybacks and dividends.
That’s money directly in your pocket – so let’s talk some more about those…
Let’s Get “Supersized”
In recent years, Apple has emerged as one of the most investor-friendly firms in the world. Since 2012, it has spent $234 billion on share buybacks and dividends.
In that time, Apple has retired 1.4 billion shares through buybacks. That’s more than 20% of all shares outstanding – and that’s like giving earnings per share an extra 20% boost, on top of the rate of growth in adjusted earnings.
Now, with all of that cash Apple has overseas washing up on our shores, those programs are about to get supersized.
Venture capital firm Loup Capital estimates that Apple will spend $125 billion to $150 billion more on buybacks and dividends than it had previously planned. That would bring the likely total planned spending on these investor perks to $450 billion over the next five years.
While Apple’s board has yet to sit down and draw up a new plan, strategists at UBS think Apple will soon announce plans to buy back $122 billion in shares through the end of 2019. Apple is nearing the end of its prior $300 billion shareholder return program (which includes buybacks and dividends).
A buyback of that size would reduce Apple’s share count by a further 681 million shares, or 13% of the current share count.
Once the above-predicted buyback plan is done, you can assume we’ll be hearing about the next wave of buybacks. And if Apple doesn’t keep stepping on the gas here, you can bet that activist investors will come on board and push for that to happen.
Apple has also delivered a steady stream of dividends to its investors.
The payout has risen at a stunning 44% yearly clip over the past five years – and I expect regular dividend payments will keep growing at a fast pace.
And that doesn’t even account for a special onetime massive dividend, fueled by that cash tsunami, that Apple may look to deliver in coming months.
While Apple’s new cash hoard will help deliver an upside jolt to shares through the ways we just talked about, don’t forget that the Silicon Valley legend’s core business is possibly the best in the world…
Bigger and Better iDevices, Too
CEO Tim Cook and his team are working behind closed doors to develop impressive upgrades to many of Apple’s core products, including the iPhone, the Watch, and the iPad, along with the firm’s line of desktops and laptops.
Plus, all this new cash stash will help Apple develop the next wave of innovative tech devices – from televisions and smart-home hubs to driverless cars. And that will keep Apple – and your share price – soaring many years to come.
Meanwhile, shares of Apple are still trading at a fraction of their peer group on a forward earnings basis. Shares trade for less than 15 times projected 2019 profits. That’s a 28.5% discount to the Nasdaq 100.
Apple’s stepped-up pace of hot new product launches – and those supersized buybacks and dividends – bolster my view that this stock is headed to $250 within 30 months.
Along the way, we’ll be talking about the world’s first trillion-dollar company when it hits $232.
To me, all this makes Apple a buy-more-on-the-dips for current shareholders… and a buy-for-the-first-time for everyone else.
And remember to invest all those dividends you receive – your own personal cash tsunami – so that you can pile up wealth even faster.
I hope you’re able to use that wealth to fill your biggest dreams – whether that’s paying off your kids’ college tuition or making a down payment on the sailboat you’ve always wanted.
I’ll be back later this week with more investment ideas to help you get there.
See you then.
— Michael Robinson
Source: Strategic Tech Investor