Don’t look for Apple sales to go sour anytime soon

Apple’s (Nasdaq: AAPL) current success is built on its iOS mobile operating system, powering the iPad, iPod touch and iPhone, and turning Apple into a $300 billion company. Many think it must produce new home runs to keep its share price from crashing, but that’s not true. Regardless of CEO Steve Jobs’ recent medical leave of absence, Apple’s existing products can sustain its growth.

Reports of Apple’s rising orders for the next-generation iPad are stunning. Some expect orders to hit 65 million in 2011, which at current iPad prices would yield an extra $42 billion just in iPad sales. For context, in fiscal 2010, Apple had sales of $65 billion.

Even with more modest projections, the iPad should drive Apple’s revenue higher in coming years. Meanwhile, smartphones continue to grow briskly, and the iPhone should deliver hefty growth rates.

Beyond that, future innovation might come from iOS expansions. Apple TV could see an iOS upgrade, with the operating system connecting games to living room screens. Then there’s Apple’s foray into advertising through its iAD Creative Agency, while the Mac App Store can boost Apple’s digital distribution of applications and media.

The ability of iOS to scale from smartphone to tablet has secured Apple a powerful growth stream. That should help shareholders to sleep easier. (Apple is a “Motley Fool Stock Advisor” selection. The Fool owns shares of Apple.)

Ask the Fool

Q: When is the best time for me, a beginning investor, to buy my first shares of stocks? – S.F., Ashland, Ky.

A: As long as you expect to remain invested for the long haul, which is at least five or even 10 or more years, the best time is usually any time. If you wait on the sidelines, the market may keep rising, as it does in most years. If you wait for a pullback, the pullback may not be enough to have made it worth the wait.

There is one particularly promising entry time, though: after the market has dropped significantly, and when great stocks may be trading at more compelling prices. If you’re nervous about jumping into the market (perhaps because it has surged a lot recently), consider easing in by buying shares over time.

Remember to invest in strong, growing companies that have sustainable competitive advantages and that are trading at attractive prices. Better still, consider starting out with a simple index fund while you learn more. For additional guidance, visit www.Fool.com/how-to-invest.

Q: What is a “10-K” report? – A.G., Canton, Ohio

A: American (and Canadian) companies trading on U.S. stock exchanges have to file annual 10-K reports with the Securities and Exchange Commission. They generally feature discussions of the company’s condition and audited financial statements. They’re often accompanied by a glossy annual report featuring a letter to shareholders and photos of happy employees and customers.

In between 10-K reports, companies file quarterly “10-Q” earnings reports, and “8-K” reports are filed when there is a significant development affecting the company’s financial condition.

Learn more about SEC filings at http://www.sec.gov/answers/ form10k.htm. Familiarity with them can help you become a better investor.

My dumbest investment

Early in 2000, I became enthralled by the prospect of further stock market riches following a 40 percent return in my portfolio in 1999 due to tech stocks. I travel a lot on business, so it was early March when I sat down for lunch with my broker to discuss shifting money out of an all-too-boring index fund. After munching on expensive food, we decided I’d buy into a high-tech mutual fund selling at about $142 per share. Of course, a few days later the Internet bubble burst and techs plummeted. Chasing the market really doesn’t work. – J.D., online

The Fool responds: Chasing the market is indeed a bad move. Don’t follow the crowd, because many in the crowd know little about the market or what they’re doing – they’re just following the crowd, too. That’s how bubbles form, when people are buying with little regard for prices, which quickly get way ahead of themselves. It’s actually smart to do the opposite of the crowd: Sell when others are buying and buy when they’re selling. High-quality bargain stocks are bargains because they’re temporarily out of favor.