Profit Pregame

Why Apple’s Legal Battle is a Great Opportunity for You

Another Lawsuit Has Some Investors Worried

Apple finds itself in its competitors’ legal crosshairs once again. Here’s why I’m not concerned.

What’s happening?

Last month, I highlighted Apple’s latest Worldwide Developer’s Conference (WWDC) – an annual event in which Apple Inc. (AAPL) typically rolls out the latest software developments.

Chief among this year’s newest offerings is an upgraded version of the Apple Watch.

The Apple Series 6 smartwatch features several new health related applications, including the ability to measure your blood oxygen level.

Healthcare applications are the natural next step in the evolution of smart watches, and Apple’s latest upgrade has been met with mostly positive reviews and huge demand.

But not everyone is pleased with the latest version of the Apple Watch – most notably Apple’s competitor, Masimo Corporation (MASI), which took a major step this week in its fight against Apple.

The outcome could have a huge impact on Apple’s $30.6 billion cash cow.

Learn more here…

Where’s the money?

On Wednesday, news broke that Masimo Corp. had filed a new patent-infringement complaint with the U.S. International Trade Commission (ITC).

The dispute hinges on Apple’s newest blood oxygen monitoring feature. Masimo claims that the use of light transmitted through the body to measure blood oxygen levels infringes on five of its patents for similar devices.

This is not the first time that Masimo and Apple have butted heads. In January 2020, Masimo filed another suit which accused Apple of stealing health monitoring technology which Masimo had invented and used them in the Apple Watch.

The latest litigation requests that the ITC halt imports of the Apple Watch to the U.S. – which, if successful, could have big implications for Apple’s bottom line.

While Apple doesn’t break down revenue from just Apple Watches in its reports, the segment in which it is included accounted for $30.6 billion in 2020.

The continued fight with Masimo has many Apple investors wondering if AAPL stock can continue the strong run up we’ve seen over the past year, or if it’s time to take profits.

How do I get some?

Demand has been incredibly high for the newest Apple Watch, with many stores and online platforms being unable to keep up.

In the end, I don’t believe Masimo will completely derail Apple Watch sales in the U.S. as some investors fear. Apple simply won’t let that happen.

What’s more likely to occur is Apple offering a settlement that pays Masimo a relatively small amount compared to what it makes on Apple Watch sales for any infringement it may be guilty of – and the gravy train will continue to roll on from there.

Apple stock has been one of the market’s best performers over the past decade, and I don’t see that changing any time soon.

In fact, with the launch of the newest iPhone on the horizon – and the massive revenue stream that is sure to come with it and the upgrade to 5G coverage – AAPL’s 1.5% dip may be a great buying opportunity to grab discounted shares while traders are wary of the latest legal action.

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In the Spotlight: Changing trends in fitness

During the course of the pandemic, people all over the world were forced to change so many things about their lives.

And staying fit is no exception.

There’s been some seismic shifts in the way people exercise in our “new normal,” and one brand is raking in the profits as a result.

Brooks Running – a Berkshire Hathaway (BRK-A, BRK-B) owned company focused on running shoes, accessories, and apparel – announced some very positive results this week.

After gyms around the world were forced to close down amid the coronavirus outbreak, a lot of people have taken up running as their preferred method of exercising.

And the shift has been a huge boon for companies like Brooks that were positioned to meet the surge in demand. Brooks’ revenue is up 27% year over year and a massive 57% year to date.

While Brooks is not a publicly traded company, it does give us some insights into the massive opportunity that shifting trends can present.

As much of the U.S. returns to close to pre-pandemic conditions, we’re likely going to see more than a few shifts back to old habits – not just in exercise, but a wide variety of industries.

With the worst of COVID-19 mostly in the rearview mirror, I’ve got my eyes peeled for the best profit opportunities as we could be on the precipice of another major lifestyle shift. As always, I’ll be keeping you posted here on Profit Pregame.

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