Tech

Apple investors, you're trading this stock all wrong: Pro

Apple morphing into trading stock: Analyst
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Apple morphing into trading stock: Analyst

Apple no longer represents the "shining example" of a hypergrowth company, and that means investors must stop treating it like one, Sanford C. Bernstein's Toni Sacconaghi said Friday.

Shareholders should now consider Apple a "trading stock," with its upside tethered to product cycles, Sacconaghi said on "Squawk on the Street." His comments came as hundreds of Apple investors gathered at the company's Cupertino, Calif., headquarters for its annual shareholders meeting.

"Yes, investors should be looking at this company differently," Sacconaghi said. "We view it as a trading stock more than a company that we can confidently say is going to have higher earnings two or three years from now. … The risk-reward on the trade right now is favorable."

(Read more: Cramer: What shareholders want from this tech giant)

For example, when traders buy Apple shares two months before a major product launch, they see average outperformance of 10 to 15 percent, Sacconaghi said. In contrast, the two months following a product release translates to negative or zero percent outperformance.

Shareholders arrive at Apple headquarters for the 2013 annual meeting.
David Paul Morris | Bloomberg | Getty Images

"There are a lot things for investors to get excited about, and to potentially raise their numbers," Sacconaghi said. "And that's basically when the stock works."

Two immensely anticipated products for 2014—barring the new iPhone iteration—remain Apple television sets and the iWatch. The latter holds the most potential, said Bruce Tognazzini, a principal and usability consultant with the Nielsen Norman Group. An expert in human-computer interactions and former Apple employee (No. 66, to be exact), Tognazzini said the iWatch won't disappoint.

(Read more: Apple could be the latest casualty in patent war)

Other wearable devices have been like "little toys" compared to what Tognazzini expects from the iWatch, which he broke down in a blog post last year. For example, he predicts the phone will charge wirelessly, log users into websites by vouching for them, and make mobile payments by waving them them over sensors.

"It's my view that the iWatch is coming and it will be transformative," he told CNBC. "They're opening up a new area. There are some people who want to be known as first in that area who are putting out little toys, but the iWatch will be the first serious attempt to really create a transformative product in that space. And nobody's going to block them."

Apple needs new products: Analyst
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Apple needs new products: Analyst

During the shareholders meeting, CEO Tim Cook told investors the company had sold more than $1 billion worth of Apple TV set-top boxes in 2013. While the market for phones, tablets and computers dwarf the Apple TV sales, the number was positive news for Apple's television business.

"It's a little more difficult to call it a hobby these days,'' Cook told shareholders, according to Reuters.

Tognazzini, however, remains skeptical that Apple can release a full-blown, smart TV in 2014, the production of which would be hamstrung by current contracts with content providers.

With wearable tech, Apple still has the ability to create an entire market around its products, according to Leander Kahney, the author of "Jony Ive: The Genius Behind Apple's Greatest Products."

For example, he said, companies began producing tablet computers a decade ago, but it took Apple to revolutionize the tablet market in the past few years and force competitors to chase their products.

"The same is true with wearables," Kahney said on CNBC's "Fast Money: Halftime Report." "They're not looking at something like the Fitbit. They're not looking at something like the [Samsung] Galaxy smartwatch. This is going to be a whole range of technology-enabled clothing or items that you put on. ... I don't think we've seen anything like it yet."

Still, Apple's slow pace of growth concerns some investors.

Colin Gillis, a senior tech analyst at BGC Financial, asked why the company, with its massive cash reserves of close to $160 billion, hasn't been aggressive making blockbuster acquisitions.

Google made headlines by buying robotics companies, and Facebook recently agreed to pay up to $19 billion for instant messaging service WhatsApp. Why can't Apple buy wearable tech companies like Jawbone or Fitbit, Gillis asked.

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What's more, iPhones sell at a much higher premium than other smartphones—twice as much as the average price, about $650 versus $330, he said.

"It's a fine strategy to have, but it's going to come at the expense of volume," Gillis told CNBC. "Apple is going to be less effective in the emerging markets."

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters and CNBC's Bruno J. Navarro contributed to this report.

Disclaimer

This article has been updated to reflect comments from Leander Kahney.