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The Best Way to Profit on Apple's March Higher

By Sean Goldsmith
Saturday, February 21, 2015

The Weekend Edition is pulled from the daily Stansberry Digest. The Digest comes free with a subscription to any of our premium products.
 Apple continues its relentless march higher...
The consumer-products giant hit another all-time high this week of $129 per share, pushing its market cap near the $750 billion milestone.
As we wrote in the February 11 Digest, Apple became the largest company in U.S. history after its market cap surpassed $700 billion. It got another boost that day after investment bank JPMorgan raised its price target, arguing that the Apple Watch would be a success. From that Digest...
JPMorgan raised its year-end price target for the company from $140 to $145... Analyst Rod Hall is bullish on the launch of the company's "smartwatch." He increased his 2015 and 2016 earnings-per-share estimates.
To use the Apple Watch, you need an iPhone 5 or newer. Hall estimates there will be 400 million iPhone users by next month. He sees that number rising to 525 million by year's end and to 627 million by the end of 2016. He expects 5% penetration for the Apple Watch this year (or 26.3 million units).

 We agree the Apple Watch is a positive development... But we're more focused on Apple Pay, the company's mobile-payment application on the new iPhone 6 and iPhone 6 Plus.
You can load your credit and debit cards, rewards cards, gift cards, and more on your phone. Then you wave your phone over the payment processor to complete the transaction.
It's more convenient than carrying your wallet around, and safer (your information is encrypted). Apple is already partnered with 90% of the country's most-used payment cards. Consumers are using the service more and more. And the trend is clearly up. More from that Digest...
In 2012, only 120 million cell phones were equipped with the technology for mobile payments. That number doubled to 275 million in 2013. And according to research firm IHS Technology, that number will grow fourfold to 1.2 billion phones by 2018.
Media website Business Insider says use of in-store mobile payments will grow 4,200% by 2018.

 Apple earns $0.15 for every $100 users spend through Apple Pay. The company should soon start to make huge profits from the service.
But Apple Pay also makes Apple products even stickier. In addition to hosting our photos, music, videos, and travel documents, Apple is now tied into our banking and credit cards as well...
"Apple's becoming very pervasive in consumer lives and that's what could take the stock to the next level," UBS analyst Steve Milunovich told CNBC this week.
 Milunovich upped his price target for Apple to $150 a share. Hardware still plays a major role for the company, but as he noted, "services is really the glue to this story."
 The Washington Post has also picked up on the significance of Apple Pay. It ran a story about a major new merchant for the application: the U.S. government.
"Starting in September, Apple Pay will be available for many transactions with the federal government, like for example when you pay for admission to your favorite national park," Apple CEO Tim Cook said at a White House-organized cybersecurity meeting at Stanford University.
Apple is working with the government to make procurement cards issued to government employees compatible with Apple Pay. The company is also working to use its technology to help distribute state and federal benefit programs, like Social Security. From the Washington Post...
The full scope of Cook's announcement was a bit unclear, but a White House fact sheet released in conjunction with the summit said Apple, Visa, MasterCard, Comerica Bank and U.S. Bank were committed to making Apple Pay "available for users of federal payment cards, including DirectExpress and GSA SmartPay cards."
GSA SmartPay is the largest government payment program in the world, according to the General Services Administration — handling 87.4 million transactions worth $26.4 billion per year.

 That revenue stream alone is worth $40 million a year to Apple.
But Cook has larger ambitions than just revolutionizing the way we pay for goods and services. He wants the wallet to be a thing of the past. He said he would like the iPhone to store your driver's license, passport, and all other important information.
 While it's clear Apple will benefit from this huge trend, Dr. David "Doc" Eifrig recently put together a special report explaining the details of mobile-payments technology and the companies leading its development. He also identifies a number of small companies making the "guts" of this technology whose shares have the potential to soar. His presentation is free, and it's a must-watch... especially if you're an Apple shareholder. You can watch it by clicking here.
Sean Goldsmith
Editor's note: Doc's free presentation is a great and fast way to learn everything you need to know about this new technology... It's a fascinating look into the future of mobile payments and what the world will look like going forward. You can watch it by clicking here (or if you don't want to sit through the promotional video, you can read the text here).

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