The Best of the Best in Consumer Electronics Still Has More Upside Ahead

Today, we're checking back in on one of the "Global Elite"...

Here at Stansberry Research, we use this phrase to describe the best of the best. These companies dominate their industries – they have fortress-like balance sheets and powerful, well-known businesses.

Because of their position, there's usually tons of demand for these businesses. As a result, their shares command premiums in the market, making them more expensive than most stocks – but they can still have room to grow. We've covered this theme with well-known companies like Alphabet (GOOGL), Facebook (FB), and General Mills (GIS). And today's company is a leader in the consumer-electronics market...

Apple (Nasdaq: AAPL) is the perfect example of a Global Elite company...

It's one of the most well-known companies in the world. Between its iPhones, MacBooks, iPads, and Apple Watches, its products are used by billions worldwide.

Not to mention, Apple's services include things like Apple iCloud storage, Apple Music, and Apple Pay.

These capital-efficient services deliver recurring revenue for Apple. And because they're so capital efficient, it doesn't cost Apple much (if anything) to scale these offerings to millions of people as it works to expand subscriptions.

Putting the products and services together, you can see that Apple provides a seamless "ecosystem" for its customers. By making sure its products and services go hand in hand, Apple's customers have little reason to step outside and pick products or competing offers from other companies or developers.

Besides its suite of products and services, Apple has another huge tailwind going for it... According to Forbes, Apple's brand is the most valuable in the world – worth $241 billion.

Its brand draws people in. Everyone wants to own a trendy iPad or the latest iPhone. That gives Apple a huge edge over competitors. And demand for its products may be at the highest level ever...

Last month, a report from Bloomberg said that Apple planned to produce 90 million iPhones this year. That would represent a 20% jump from its "normal" level of 75 million.

The report added that Apple is looking to do this because this fall will be the first iPhone launch after many people have gotten vaccinated. And Apple believes that will translate into higher demand for iPhones.

Bloomberg also said that the ongoing semiconductor shortage shouldn't be a problem for Apple's planned production increase. Remember, in the early days of COVID-19, chipmakers were swamped with demand for electronics and other connectivity products. So they had to shift manufacturing to meet this high demand.

But now, they're getting orders for products that they shifted their focus away from – like autos. So, needless to say, chipmakers are swamped with orders. And that's causing delays in all kinds of production.

Apple likely won't fall victim to the shortage, though... In June, Taiwan Semiconductor Manufacturing (TSM) said that it would make Apple orders a priority in production. So chips for things like networking equipment, non-Apple computers, and data servers will all take a backseat in the coming months.

This demand is turning into strong results for Apple...

In its most recent quarter, Apple blew away Wall Street's expectations. Revenue surged 36% year over year, hitting a new record for this quarter. This enabled Apple to generate $21 billion in operating cash flow. It also meant the company could return roughly $29 billion to shareholders through dividends and buybacks, as well as bolster its investments to support long-term growth goals.

In a press release, CEO Tim Cook highlighted that Apple saw new revenue records in each of its geographic segments. He noted that its product categories also saw double-digit growth thanks to elevated demand for broader consumer electronics and its latest iPhones.

But despite the strong report, Apple shares actually fell after the release. The company's forward guidance showed that the company expects revenue growth to begin slowing in the current quarter. This spooked investors, who pushed the shares down more than 1%.

However, Apple typically provides very conservative guidance. It's a way for the company to reset Wall Street's expectations, giving it a lower bar to hurdle the next time around. So this time should be no different.

Apple's business is going strong. There's intense demand for its iPhones and other devices, as well as its services. And it looks like the company will dodge the fallout from the ongoing chip crunch. All these things should serve as continued tailwinds for this Global Elite company's shares.

Sometimes investing is simple.