The unveiling of the Apple Watch was underwhelming.
Most people just didn’t care. It wasn’t revolutionary like the iPod and iPad. Estimates of Apple Watch sales aren’t good either..
It’s all a distraction though.
Apple’s next big growth opportunity isn’t watches. It’s something much bigger and Apple’s going head to head with Google and other tech giants to get a piece of what’s set to become a multi-trillion dollar market.
Apple’s Next Big Growth Opportunity
Big tech companies are aggressively trying to stake their claim in mobile payment processing.
So far, the stakes have been pretty low.
Apple has a deal with Starbucks to allow customers to pay for their coffees with their iPhones.
And the mobile payment market had been pretty slow to get off the ground.
But that’s finally changing fast.
This chart from Business Insider sums up why these tech heavyweights are moving big into mobile payments right now:
The mobile payment industry is on a parabolic growth trajectory that’s just starting to break out.
The chart shows hundreds of billions within a couple years.
You can bet that will be trillions of dollars in a few years after that, meaning billions of dollars for tech companies and their shareholders.
To show you how big a value opportunity this is, let’s look at Visa (V), the top traditional payment processing company in the world.
Now, you must realize Visa is not a lender. It doesn’t make loans to consumers or charge interest. Banks that issue Visa cards do. Visa just takes a small fee and a percentage of the total transaction value.
It’s a great business to be in and Visa now has a market value of $180 billion.
Now let’s break that value down so we can compare it to mobile payment processing.
Visa has 2.3 billion cards outstanding including credit, debit, prepaid, and ATM cards.
A total of $7.3 trillion in cash and credit transactions were processed on the Visa network last year.
Based on this data -- the market value of Visa and its transaction volume -- the company is basically worth 2.5 cents per annual dollar in network transactions.
If we take that 2.5 cents per transaction dollar number and apply it to mobile processing, we can see there is about $1 billion in business value to be created with $40 billion mobile processing payments.
That’s not much. But when we see the future of mobile payments, we know there are tens of billions at stake. Probably over $100 billion in total value creation as mobile payment processing moves into the trillions.
For investors though, there is an additional factor to consider.
Like I said, the mobile payment business is a great one to be in because they are exploding right now.
You see, in mobile payment processing, the value is in the network as it is in traditional payment processing.
That’s why Visa is worth more than two cents for every dollar in transactions it processes because once the fixed costs are covered, all additional revenues are very high margin.
For example, a recent recommendation I made to the Oakes Momentum Report readers uncovered an early mover in the sector positioned for significant price appreciation.
After a short wait things are really starting to move.
Over the last three years this company has increased its revenues by 70%.
Its profit margin has tripled over the same time period.
And net profits have more than quadrupled.
More importantly, after completing a full chart analysis, I’ve found the stock has more than 100% capital appreciation potential in the next year before it hits its first major resistance point.
It has everything you could want. It’s a stock at the right price, at the right time, in the right sector.
And this is a great example of how investors can profit with an eye on the future.
I realize the world is changing fast. Everything is going mobile. And there are going to be a lot of companies (and shareholders) who get left behind.
There’s one constant we do know that won’t change. Buying shares in well-positioned companies targeting major growth opportunities when the charts say it’s time to establish a position will be a winning combination.
As long as you do that, you’ll be well on your way to thriving in an ever-changing world.