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Wednesday is a big day for Apple (NASDAQ: AAPL) and its investors. The technology giant is expected to unveil several new product developments at a major event in San Francisco.
Apple stock has had a topsy-turvy year. The stock recently entered correction mode, having fallen more than 10% from its 52-week high. This means it could use a positive catalyst.
Fortunately, Wednesday’s event could be just the spark Apple needs.
What to Expect on Wednesday
Among the agenda items, Apple is expected to announce major updates to many of its core products. First, is the new iPhone. Apple is widely projected to unveil the iPhone 6S and iPhone 6S Plus. Analysts are anticipating an upgraded camera and a more powerful processor. But perhaps the most highly-awaited update is Force Touch, in which consumers can perform different functions depending on how hard they press down on the screen.
Next up is the Apple TV, which sorely needs an upgrade. It’s speculated that Apple will introduce a new Apple TV that will include voice recognition. And it’s being reported that it may allow users to command the TV through personal assistant Siri, which could be a precursor to an eventual full replacement of physical remotes.
Last but not least, various media outlets are reporting Apple may introduce two new iPads, the iPad Pro and iPad Mini 4. The Pro could have Force Touch technology as well. And the iPad Mini 4 is likely to be thinner than the previous version, with more processing power.
Apple Needs Something Big
Apple has enjoyed tremendous growth over the past year, thanks largely to the iPhone 6, which was a smash hit. Apple’s revenue and earnings per share soared 29% and 44%, respectively, through the first three quarters of the fiscal year.
With an extremely tough comparison period next year, it will be very difficult for Apple to continue to produce such strong growth. That’s why it’s critical for the company to announce several new products, because it’s unlikely iPhone sales will keep pace with this year’s record numbers.
Fortunately, Apple’s new products should generate enough growth for the company to keep investors happy, and the stock is very cheap at its current level.
Apple Stock Is a Bargain
Right now, Apple stock trades around $110 per share. That means it is down 17% from its 52-week high of $134 per share, which implies investors are more pessimistic about the company than at any point this year.
But that pessimism is not backed up by the fundamentals. If anything, investors should view Apple as a bargain. The stock trades for 12 times trailing earnings per share, and just 11 times forward EPS estimates. These valuation multiples represent meaningful discounts to the broader market, and Apple is even cheaper after accounting for its massive cash pile.
Considering the growth potential of Apple’s new product launches, these valuation multiples are too cheap. Apple stock is a buy right now.
DISCLOSURE: Bob Ciura personally owns shares of Apple (NASDAQ: AAPL).
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