Back to top

Video Blog

Yesterday news broke that Apple (AAPL - Free Report) may be interested in acquiring hyper car manufacturer and Formula One team McLaren. When Apple bought Beats Headphones it made sense. But Apple looking at McLaren? On the surface it’s a bit of a head-scratcher. Let’s dig in a little bit to explore why on Earth Apple would want to do this.

First, a little about McLaren. Founder Bruce McLaren was a race car driver and engineer who developed his own Formula One car in May 1966. It wasn’t until 1993 that McLaren made its first road car, the iconic McLaren F1. In 2004 the McLaren Technology Center was built in Surrey, England and since then the company has gone on to build some of the fastest, most beautiful super cars in the world, beginning with the MP4-12C in 2009.

They also happen to be one of the most successful marques in Formula One racing history. McLaren knows how to build cars. Their engineers have found unique ways to put mind-boggling capabilities in the hands of regular car owners while saving them from killing themselves. Try giving a suburban dentist 616 hp and setting him loose on the street without driver assists like traction and stability control. It’d be like watching mustangs leave car shows.

Then there’s the McLaren factory itself. It’s less an auto plant and more a biotech manufacturing facility. You’d think they were making surgical grade implants there. Every room is set to a precise 21 degrees Celsius and every screw is vertical so the heads won’t collect dust. It’s a white-glove, sterile, automated operation with advanced technologies found nowhere else in the world. 

Just listen to how McLaren describes its own factory. “Conventional architecture was unable to find an elegant solution capable of supporting the MTC’s magnificent glass façade.” That’s a pickup line right there if I ever heard one. Girl, conventional fashion was unable to find an elegant solution capable of supporting that...As for the potential deal with Apple there are plenty of synergies, both business-wise and culturally.

The automation, the engineering, not to mention a potential tax advantage for Apple with McLaren being headquartered overseas. The company makes phones and tablets. Creating a car is an entirely different animal. By acquiring a company like McLaren Apple could solidify itself as a major player in the autonomous car space.

Better move fast as self-driving vehicles are already being tested on the streets of Pittsburg. So is the iMacLaren right around the corner? Apple is sitting on $200 billion in cash while McLaren is valued at around $2 billion. Meaning Apple has enough money to buy McLaren 100 times over right now. The deal makes sense, just as long as Apple doesn’t change the special sauce at McLaren.

They’ve got to do something to find growth. We’ve got them as a Zacks Rank #3 (Hold) right now because analysts haven’t been able to make up their minds. Nine analysts have upped their estimates for how much money they think Apple is going to make this year, while six analysts have dropped their numbers. The result is our Zacks Consensus Estimate for the current year is the same as it was 60 days ago, stuck on $8.28.

The stock’s been on a run along with the rest of the market though. Today it’s trading near $115 after dipping to the low $90s during the summer. The huge move in early September broke out through resistance at $112.

Every time you share this video, I get a little bit closer to that MP4-12C I’ve been dreaming about. Chime in the comments section below, and tell me if you think it’s a good idea for Apple to buy McLaren. Subscribe to the YouTube channel, Twitter @bartosiastics and come back here for all the Trending Stocks with Zacks.com, I’m Dave Bartosiak.

In-Depth Zacks Research for the Tickers Above

APPLE INC (AAPL) - FREE report >>