According to an article published in The Wall Street Journal, Apple Inc. (NASDAQ:AAPL) is likely to etch a new chapter in automobile history by accelerating efforts to develop an electric car, reportedly setting an ambitious ‘target shipping date’ for 2019. Although the company spokespersons have refused to comment on the grapevine, speculations are rife that the project, code-named Titan, has received a green light to triple its headcount from its current tally of 600 to meet the deadline.
With ingenious products that are based more on functionality and usability, Apple creates technological innovations that customers least expect, focuses on its unique selling points to build need and scales up production before competitors can react. This has historically enabled the company to gain a competitive advantage over its peers and create a niche market for its products. (Read: 3 Stocks That Followed Blue Ocean Strategy: What’s in Store?)
Consequently, when such awe-inspiring news hit the market, it is bound to create ripples in the industry, fanning widespread fears about probable hostile takeovers to ease vertical integration and ruffling the feathers of other auto manufacturers.
Apple Car & Its Targets
Among the established players in the electric car segment that are likely to face the heat with the advent of Apple Car, Tesla Motors tops the list. This automobile manufacturer sells battery-charged electric cars across the globe and has managed to acquire substantial market share with innovative designs and features. Its Model S car was the best-selling electric vehicle in the U.S. in the first half of 2015.
Ford Motor is also likely to bear the brunt of competition as it struggles to find its feet after massive restructuring initiatives. According to the Society of Motor Manufacturers and Traders, new car registrations rose by 9.6% year over year to 79,060 vehicles in August 2015 with strong demand for electric cars like Ford Focus Electric. However, experts fear that such enthusiasm will gradually fizzle out once the Apple Car hits the market, given the vociferous appetite of consumers for out-of-the-box Apple products.
New Features the Gamechanger?
The leaked features of the rumored Apple Car promise to capture the imagination of both admirers and critics. These include a windshield screen that apparently derives some of its technology from the airplane, displaying driver information in the operator’s line of sight to help drivers keep their eyes on the road while piloting their vehicles.
The screen in the Apple Car is likely to be controlled by gestures and drivers would be prompted to sign into iCloud before each gear shift, thereby recommending new driving speeds based on users’ past favorites. The car would be lightweight yet powerful and compatible with all types of roads and wheels are likely to turn into rainbow pinwheels whenever the car stalls.
Such innovative features from the Apple stable can help redefine the dynamics of the beleaguered auto industry that is grappling with the softness in Europe, the near collapse of the Russian economy, volatile currencies and political instability in some parts of the world. The domestic market currently appears to be the lone bright spot, with falling unemployment, modest economic growth and low gasoline prices.
Amid such a scenario, Apple could script a new era with its lithium battery charged electric car, leveraging its technological prowess, highly resourceful human capital and enormous stock pile of cash to help it acquire various suppliers such as small auto parts manufacturers and battery producers for an integrated supply chain management. We hereby speculate on four probable stocks that could end up in Apple’s kitty with the arrival of the Apple Car.
4 Probable Stocks That Apple Could Rack Up
Arotech: This Zacks Rank #5 (Strong Sell) stock has two business divisions – Training and Simulation, and Battery and Power Systems. The Battery and Power Systems division manufactures and sells Lithium and Zinc-Air batteries and chargers for the Military.The company has a dismal earnings track record with a trailing four quarter average earnings surprise of -88.9%. The shares have registered an average return of -55.3% in the last one-year period, making it perfectly suited for acquisition.
EnerSys: This Zacks Rank #4 (Sell) stock is the largest manufacturer, marketer and distributor of industrial batteries in the world. It also manufactures and distributes chargers, power equipments and battery accessories and provides aftermarket services for industrial batteries. EnerSys has reported an average return of -15.7% in the last year and has a trailing four quarter average earnings surprise of -1.3%.
FMC Corp.: Based in Philadelphia, this Zacks Rank #3 (Hold) stock serves agricultural, industrial, environmental and consumer markets across the globe. Its Lithium segment offers lithium for use in batteries, polymers, pharmaceuticals, greases and lubricants, glass and ceramics, and other industrial uses. The company recorded a trailing four quarter average earnings surprise of -0.2%. The shares have registered an average return of -37.5% in the last one-year period, making it a perfect takeover target.
Genuine Parts Company: Based in Atlanta, GA, this Zacks Rank #4 (Sell) stock distributes automotive and industrial replacement parts, office products and electrical/electronic materials in the U.S., Canada and Mexico. The company distributes automotive replacement parts for various types of vehicles and accessory items used in the automotive aftermarket. Genuine Parts has reported an average return of -4.6% in the last one-year period and has a trailing four quarter average earnings surprise of -0.6%.
Adam Jonas, a Morgan Stanley analyst, observed, “Apple is sitting on nearly $180 billion of cash, an amount materially in excess of that of the entire global auto industry… combined. Imagine if even a small portion of these funds were put to use with a collection of scientists and software engineers in a transport application.” Let’s wait a bit to find out if Apple can indeed transform the automobile industry and live true to its reputation of being a bona fide innovator.
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