BusinessWeek calls it the “Apple Economy” – the flurry of new products, services, and companies that have sprung up over the last few years to cater to Apple customers. In recent years the Apple economy has become a multi-billion dollar business for scores of smaller companies who want a piece of the pie. And one week in June could be a big catalyst for penny stock profits.

As you read this, analysts at top financial and consulting firms are getting ready for next Monday, June 8. That day marks the start for Apple’s World Wide Developers Conference (WWDC), an annual meeting of the company’s software and hardware partners that’s historically been the launching pad for some of Apple’s most prolific products.

Rumor has it that a pretty big announcement is set for Monday: the next generation iPhone.

For months now, the dozen or so Apple-obsessed websites have been publishing leaked photos, product specs, and speculation about the new device – whether or not any of it will actually prove true come Monday is another story. One of the reasons for the hysteria is Apple’s culture of secrecy. The Cupertino, California-based technology company keeps new products closely guarded until the time is right for a big release.

The Small-Cap Connection

All of those big releases have meant big money for Apple – the company took in $32 billion in revenues last year. They’ve also meant big money for the handful of small companies that makes money by selling peripherals, software, and support to Apple’s customers.

One of the best examples is Zagg (OTC: ZAGG), a company that makes cases, headphones, and other accessories for the iPhone. While the company posted net losses in 2006 and 2007, since the iPhone’s release it’s managed to swing to a pretty substantial profit. ZAGG stock is up 420% since January as a result.

And some people are seeing even bigger returns from the Apple economy.

Look no further than Ethan Nicholas, a one-man team who watched his iShoot, a game sold on Apple’s iPhone Application Store, climb to No. 1 on Apple’s list of most popular paid applications.

In just two weeks, iShoot netted Nicholas almost $400,000 in profits… and the application is still selling as we type. That mountain of money has prompted Nicholas to quit his day job at Sun Microsystems to pursue game development full time.

Since the App Store was launched in July 2008, the company has sold more than 1 billion applications to iPhone and iPod Touch users. Clearly Nicholas hasn’t been alone in his Apple windfall, and penny stock game developers are cashing in too.

Among them was an over-the-counter stock that small-cap analyst Greg Guenthner recently recommended to his readers over at Bulletin Board Elite. Since his recommendation, the company has grown its net income by 42% this year, removing any doubt that even the little guy can profit from what’s going on right now.

“Hi, I’m a Mac”

Apple’s come a long way from the computer company that almost went bankrupt in the mid 1990s. Since Steve Jobs returned to the helm of this prolific company fortunes have been great for Apple – and for the Ethan Nicholases and Zaggs of the world.

Keep your eyes peeled on Monday… it could be a big day for small stocks that operate in the Apple economy.

Cheers,
Jonas Elmerraji

June 6, 2009

Jonas Elmerraji

A big-four public accounting alum, Jonas Elmerraji brings his readers extensive expertise in small-cap stocks and broad market moves. Elmerraji’s interest in the market started with an investing course in elementary school – today he holds a degree in financial economics from UMBC and specializes in blending fundamental and technical analysis. Elmerraji has contributed to Forbes, TheStreet.com, and Investors Business Daily among others. He is managing editor of the Penny Momentum Trader, and a co-editor of Penny Stock Fortunes.

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