This Dominant Tech Company Is Ready to Soar Higher

Regular readers will recognize the term "Global Elite"...

Here at Stansberry Research, we use this phrase to describe the best companies in the world. They 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.

Apple (Nasdaq: AAPL) is a clear Global Elite company...

The company needs little introduction. Between its iPhone smartphones, MacBook computers, iPad tablets, and wearable Apple Watches, it has products that all work seamlessly together.

And these products generate incredible brand loyalty. So once a consumer has Apple products, he's unlikely to switch to a competing brand. And that lets Apple charge a premium for its devices.

But Apple doesn't just have hardware...

The company has also been building out its services business. This includes things like Apple Maps, Apple Music, and Apple Pay.

Apple has worked hard to expand subscriptions for some of these services. Last year, it unveiled a "bundle" for its different paid services. Now, people can pay $14.95 per month for a group that includes Apple TV, Apple Arcade, and cloud storage.

These services deliver recurring revenue for Apple. And much of that revenue comes at no little added cost to the company, as many of its subscription services are economical to scale to millions of people.

The services segment is also Apple's fastest-growing business...

Over the past five fiscal years, services have grown revenue by more than 20% annually in all but one year (when growth was "just" 16% in 2020). In the most recent quarter, services made up about 22% of Apple's revenue, up from only 9% in 2015.

This is all a part of Apple's "ecosystem"...

By building out a suite of products and services that are all heavily integrated, Apple gives its customers little reason to pick competing offerings from other companies or developers. This gives Apple more ways to generate profits.

Apple is also working to become less reliant on its suppliers. The company has begun building its own semiconductor chips to include in its products, rather than buying them from third parties. In fact, the newest version of the MacBook computer is powered by Apple chips.

Back in October, Apple's third-quarter iPhone revenue fell short of estimates, prompting a sell-off in the company's shares. But things have likely turned around in the fourth quarter...

Around the same time it reported earnings, Apple released the new iPhone 12, the first Apple smartphone to be compatible with faster 5G connectivity. 5G is leading a massive upgrade cycle for smartphones. And consumers are going to update their smartphones to get the fastest speeds, meaning that Apple users won't want to skip the iPhone 12.

According to a report from digital media company DigiTimes, Apple sold about 18 million new iPhones in China in the fourth quarter, good for more than 20% of the Chinese smartphone market and well above what the company had expected.

This isn't the only positive sign for the iPhone 12...

In November, iPhone assembler Foxconn said that it had seen "stronger than expected" demand for smartphones. It added that a lot of its growth throughout the winter would be driven by high demand for the newest iPhone during the holiday season.

And the Nikkei Asian Review recently reported that Apple is planning to produce 96 million iPhones in the first half of 2021. That represents a 30% jump from the same period last year. And for all of 2021, Apple is tentatively forecasting production of about 230 million iPhones, Nikkei said. That would be a 20% increase from 2019.

Strong iPhone demand is a good sign for Apple's overall sales. While the company has shifted some of its focus to its growing services business, iPhone demand still makes up about half of Apple's total revenue. So higher-than-expected iPhone demand could lead to Apple's sales coming in above estimates when it reports fourth-quarter results later this week.

And the strong demand that Apple likely saw in the fourth quarter very well could carry over into 2021. After all, the 5G upgrade cycle is still in its infancy. There are still millions of iPhone users who will upgrade their smartphones in the coming months and years.

And the iPhone isn't all Apple has going for it. Its growing services business will keep people using Apple products instead of switching to the competition... That's the mark of a true "Global Elite" business.

Sometimes investing is simple.