Apple Investors: How to Play the iPhone 5

James Rogers

SAN FRANCISCO (TheStreet) -- Apple(:AAPL) investors shouldn't panic if a modest selloff follows the expected launch of the iPhone 5 later Wednesday, according to Mark Moskowitz, an analyst at J.P. Morgan.

"In recent years, the lead-up to a major product launch has resulted in shares of Apple appreciating, only to trade flat or down in the days immediately following the launch," he explained, in a recent note. "Following the potential iPhone 5 and iPad mini launches, we recommend that investors take advantage of any near-term selling pressure -- Apple's stock has more than recovered from any post-launch trading pressure."

From the iPad and iPhone 4 launches in 2010 through to the iPad 3 earlier this year, Moskowitz said that Apple's stock has, on average, traded up 5.7% in the 30 days leading up to its product announcements. In the seven days following the launches, however, the stock has typically gained just 2.6%, but has climbed 5.2% within 30 days of the announcements.

Apple's stock has risen 6.26% over the last month.

The iPhone, of course, plays a critical part in Apple's upside, as evidenced by the lull in demand ahead of the anticipated iPhone 5 launch.

TheStreet will be live-blogging Apple's product launch.

"The unprecedented break-out in Apple's stock price has been primarily driven by the iPhone's success in both profit and revenue contribution," explained Moskowitz. "Apple's stock is up 453% since the launch of the iPhone 2G version on June 29, 2007, versus the S&P's decline of 7%."

While Apple has successfully kept specific details of Wednesday's announcement secret, the company's latest, greatest iPhone will inevitably make its debut at the Yerba Buena Center for the Arts Theater.

Former Apple investor Robert O'Neil, however, told TheStreet that he's not overly excited about Wednesday's events. "I will be looking beyond what the company announces (most likely) to see if I feel they have that spark and can be truly innovative," he explained, in an email. "To be an Apple investor again, I want to know the company's innovation is alive and well."

Ernie Varitimos, who currently doesn't own Apple, said that he's looking for a near-term correction in the company's stock. "I believe it needs to pull back some before advancing," he wrote, in an email.

Varitimos, who runs the Javachief blog, has plenty that he wants to see from the iPhone 5, nonetheless.

"What I would most like Apple to announce is an iPhone that fixes the problems with the current iPhone 4, and primarily that is a problem of fragility -- of the four iPhones we have in our family, three have shattered glass," he explained. "I love the design from an aesthetic and usability point of view, but from a durability view point, the glass is simply a poor design."

Varitimos would also like to see Apple improve the quality of its ear buds. "This is a five-year old problem," he noted. "I've gone through tons of ear buds, ever since the first iconic white bud was introduced."

Like many people, Varitimos thinks that Apple may lengthen its glass design on Wednesday, improve its back-side camera, and introduce a new connector.

"A mag connector is a no brainer," he wrote. "Something simple to connect and disconnect and less susceptible to getting gummed up and failing also makes it easier to connect when you're in the car, or for accessibility needs."

Apple shares closed down 0.32% at $660.59 on Tuesday.

--Written by James Rogers in San Francisco.

Follow @jamesjrogers

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