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Apple Stock a ‘Strong Buy’: Analyst

One factor in Apple's business promises revenue and earnings growth for the company, Raymond James Managing Director Tavis McCourt said Monday.

"The trend is up is basically their subscribers, and what we've had the last few quarters was what I think was a one-time substantial downtick in gross margins that were driven by largely the iPhone 5," he said. "And as the iPhone 5 and the 5s gained volume and discounted manufacturing costs based on that volume, I think the gross margins will tick up."

Shares of Apple traded at $410.53 midday, up 3.53 percent.

On CNBC's "Fast Money," McCourt said that its stock price would be choppy in the near term but had a price target of $600 for it.

"I don't really look at the chart movements as having a predictive factor on near-term or long-term fundamentals at Apple," he added.

(Read More: Google Stock Poised to Hit $1,000: Analyst)

McCourt said that negative sentiment on Apple likely had to do with competition from Google's Android mobile platform.

Yet he noted that Apple enjoyed 90 percent retention rates among its customers.

"That's really unique in the history of consumer products," he added. "I'm sure Nike doesn't have a 90 percent retention rate on sneakers and Whirlpool on refrigerators and so forth. And certainly never in the history of consumer electronics have we seen consumer retention rates that high."

McCourt said that he expected Apple's customer base to expand.

(Read More: Despite Expectations, Apple Stock to $500?)

"As long as the subscriber base is growing like it is, and we believe it's growing 30 percent-plus, at some point that retention rate and the subscriber-base growth will turn into earnings growth as you get a product worth upgrading to," he said.

McCourt also said that Apple stock would benefit from as whatever next product the company introduced.

"And look, that may be the 5s," he said. "It might be a bigger-screen iPhone next year. It might be a low-end iPhone. But there's a lot of swings at the plate that this company has over the next several quarters to reinvigorate revenue and earnings growth."

Trader disclosure: On July 1, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Joe Terranova is long VRTS; Joe Terranova is long TRV; Joe Terranova is long AXP; Joe Terranova is long OXY; Joe Terranova is long CRUDE OIL FUTURES; Joe Terranova is long MINI S&P FUTURES; Stephanie Link is long AAPL; Stephanie Link is long GS; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long CSCO; Stephanie Link is long FB; Stephanie Link is long EBAY; Jon Najarian is long AAPL; Jon Najarian is long GLD; Jon Najarian is long ALXN ; Jon Najarian is long DFS; Jon Najarian is long EXC; Jon Najarian is long MAR; Jon Najarian is long OC; Jon Najarian is long SUNE; Jon Najarian is long TIVO; Jon Najarian is long TMO; Jon Najarian is long ZNGA; Jon Najarian is short NEM puts; Jon Najarian is short ABX puts; Jon Najarian is short AGQ puts;

For Tavis C. McCourt
Raymond James & Associates makes a market in shares of the Apple Inc.


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