A lot of investors were surprised at last week’s 10.5% move for Apple (AAPL), a stock that many investors had left for dead.  But that always seems to be the way things go with stocks.  Everybody jumps on the bandwagon until somebody else jumps off, leaving the others to wonder why.

Then and only then is the veil lifted so that investors can reassess the company’s potential in the light of reason.  That happened last week in dramatic fashion when Carl Icahn tweeted that he had taken a substantial position in the company.

Why now, and what are the catalysts that could take Apple dramatically higher?  Here are a few:

Icahn’s Participation

His investment is worth over a billion dollars, but he could choose to “up” his stake in the company at any time.  Known to enter a company when its management has become complacent, he tends to be very vocal, and his hope is that he will convince the company to expand its buyback program that could dramatically increase the stock’s value.  He has already had productive discussions with CEO Tim Cook and is likely to have others.

Could the company actually listen to him?  Well, RBC Capital Markets analyst Amit Daryanani told Barron’s that, he sees “plenty of potential” for an expanded buyback program given the fact that the company’s ratio of debt/ebitda is abnormally low at 0.3 versus the tech industry average of 1.8.

Icahn’s influence on the product side might be limited, but his role as an a large shareholder could become the catalyst to shake up the company’s management.

Valuation

Then, there is the company’s valuation.  Yes, there’s Carl Icahn’s personal assessment of the company as being “extremely undervalued,” but then there are the cold, hard numbers.

At its current price, Apple has a P/E of only about 12.53.  Meanwhile the P/E of the average stock in the S&P 500 is around 18.8.

The Product Cycle

Apple is set to announce its refresh of the iPhone line on September 10^th, which was the original catalyst for the stock’s move prior to Icahn’s announcement.

This event will undoubtedly see the unveiling of the iPhone 5S and if rumors are true, possibly a cheaper iPhone, currently dubbed the “5C” on the internet.  There’s talk of multiple colors and fingerprint readers, but actually, little is known as to exactly what the company will release.

This move of creating a cheaper iPhone is controversial in that while it could help the company become more of a player in emerging markets, it could cheapen the Apple brand or cut into the company’s profit margins.

Apple’s gross margins have decreased year-over-year, from around 42.8 percent in the June 2012 ending quarter to 36.9 percent in the June 2013 ending quarter.

Finally, there is 2014 which could be a big year for Apple, including not only a possible iPhone 6, but an iWatch, and even a much-rumored TV product.  In fact, some rumor mongers have it that a TV product could be released as early as September or as late as November.  Exactly what the “product” is, no one is certain, but most don’t expect a full-sized internet-capable TV.

Possible Deal With China Mobile

This story has been on the back burner for some time, but rumor has it that recent discussions between Apple and China Mobile have taken a favorable turn.

China Mobile has over 1.13 billion customers, the largest of any other carrier in China.  The technical impasse with Apple has centered around the deployment of TD-SCDMA and China Mobile’s requirement for modems to support TD-SCDMA and global standards to enable roaming, which no modem was capable of doing.

That is, until Qualcomm (QCOM) designed the first chip capable of meeting China Mobile’s requirements and apparently it’s now ready for production.

One of the big remaining business issues is that of subsidies, and a low cost iPhone will go a long way to making subsidies less expensive for the carriers.  This is important to China Mobile, because its competitors have been heavily subsidizing the iPhone in order to gain market share, and the largest phone network in China wants to use its leverage to get a better deal.

Separate and apart from all these catalysts are the series of bullish chart patterns the stock has formed on its ascent, which I have been regularly sharing with my subscribers.

What are your thoughts?  I’d love to hear from you.