Will the iPad 3 Be the Next Catalyst for Apple’s Stock?

Apple Inc (NASDAQ:AAPL) probably has the best product pipeline cycle in the known universe. Steve Jobs et al have designed a product release schedule that keeps the acolytes excited and seemingly never ends.

The iPhone smartphone is a perfect example of Apple’s dominance.  “It captured two-thirds of all profits in the mobile phone business last quarter, according to statistics from Asymco. Another way of looking at it: Apple made about twice as much profit on mobile phones as Samsung, RIM (NASDAQ:RIMM), and HTC (NYSE:S) combined, while Nokia (NYSE:NOK), Motorola (NYSE:MSI)(NYSE:MMI), Sony-Ericsson (NASDAQ:ERIC), and LG all saw losses.”

Now, Apple is releasing the sure-to-be blockbuster iPad 3. The product release will act as a huge catalyst for Apple’s stock. As long time Wall St. Cheat Sheet readers know, a ‘Catalyst for a Stock’s Movement’ is the ‘C’ in our CHEAT SHEET investing framework.

Although all of Apple’s (NASDAQ:AAPL) new iPhones, Macs, and software are key products, the tablet sector is a growing industry with consumers and competitors. A recent Nielsen survey revealed the Apple iPad was the most desired consumer electronic among kids ages 6-12 during the holiday season. The iPod Touch and iPhone came in second and third, respectively. The Apple iPad is also the most desired consumer electronic among kids 13 and older. The iPad 3 will have new and cheaper competition from Amazon’s (NASDAQ:AMZN) Kindle Fire, and Barnes & Noble’s (NYSE:BKS) new Nook. Apple’s chief competition is the Kindle Fire, but Amazon has made their product so affordable, that it falls into an entirely different market. The Fire is also smaller than the iPad with just a 7” display.

According to a study by Mashwork, Inc. and Hall & Partners, for every ten times the iPad 2 was discussed in social media relating to Black Friday, Amazon’s Kindle Fire was mentioned only once.  The study goes on to explain that shoppers tend to discuss brands on social media that they are engaged and familiar with. This means Apple (NASDAQ:AAPL) has a strong catalyst coming with the March 16th iPad 3 release, as consumers are likely to stick with brands they are comfortable with. Barring any systemic issues regarding geo-political risk or oil price tension, dips in Apple’s stock during the release of iPad 3 should provide investors with excellent opportunities to build a winning position.

To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com