Apple stock is on pace for its best year since 2009, but it has room to run higher in 2020, a longtime Apple (AAPL) analyst says.
XIn a blog post Friday, Gene Munster, managing partner at Loup Ventures, called Apple stock his pick to be the "top performing FAANG stock in 2020." FAANG is an acronym for a group of tech giants, including Facebook (FB), Amazon (AMZN), Apple, Netflix (NFLX) and Google parent Alphabet (GOOGL).
"When compared to other tech and services companies, we consider the fair value for AAPL to be $350-$400," Munster said. "We believe the base case of $350 (21% upside) is achievable in 2020 and $400 (38% upside) is achievable sometime in 2021."
On the stock market today, Apple stock dipped a fraction to 289.80. Through Friday's close, Apple stock has risen 83.7% so far in 2019. That's its best showing since 2009 when it rebounded 146.9%, following a 56.9% dive in 2008.
In intraday trading Friday, Apple stock hit an all-time high of 293.97. That marks its 11th record high in the last 15 trading sessions.
Apple stock, on the IBD Leaderboard lineup of premium market leaders, is climbing further into a profit-taking zone after clearing a 221.47 buy point in September.
Five Reasons Apple Stock Will Outperform In 2020
Munster sees five reasons why Apple should be the top-performing FAANG stock in 2020.
First, the company is likely to return to growth in iPhone sales thanks to easier year-over-year comparisons.
Second, Apple is poised for continued growth in wearables. Those products include the Apple Watch and AirPods wireless earbuds.
Plus, Apple is seen releasing tracking devices called Apple Tags, which would compete with privately held Tile, he said. Munster expects Apple to come out with Apple Tags late in 2020.
"Apple Tags will attach to keys, wallets, and other belongings to keep track of their location," he said.
Third, Apple is preparing to release up to five new iPhones in 2020. They include a new version of the entry-level iPhone SE handset in first half of the year and 14th-generation iPhones, possibly called iPhone 12, in the fall.
Investors Excited About 5G Upgrade Cycle
Fourth, Apple stock should benefit from investor excitement over the 5G wireless upgrade cycle. Several of the next-generation iPhones will run on 5G networks.
"5G will be the biggest iPhone upgrade cycle since calendar year 2015, which benefited from the first full year of the larger screen iPhone 6," Munster said.
Finally, Apple stock will be rewarded with a "proper tech multiple" in 2020, Munster said.
"We expect AAPL's earnings multiple to increase in 2020," he said. "Investors will begin to recognize Apple's combination of hardware and services as a high-visibility and sticky business."
He added, "Over the next year, we believe investors will gain confidence in applying a more services-like multiple to AAPL given the hardware business (iPhone and wearables) will deliver revenue visibility similar to traditional services businesses."
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor companies.
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