Jim Cramer: Apple deserves a breakout

“Could this be the long-awaited breakout of Apple (AAPL)? This stock has been, with the possible exception of Google, the most profound disappointment of 2007,” Jim Cramer writes for RealMoney.com.

“The froth of the iPhone coupled with a belief that the new device must be a failure because of its price point — even as my teenage daughters tell me otherwise — has kept a huge lid on the story,” Cramer writes. “I think that lid could be sliding off.”

Cramer writes, “Here’s why: We are able, now, to see the power of Steve Jobs. He owns a whole industry with this iTunes, a whole industry. Who can imagine what will happen when we get to iTV [Apple TV]?!?”

“Jobs is the most important man in media; therefore, Apple is the most important company in media — again, with the possible exception of Google,” Cramer writes. “To me that’s worth more of a premium than Apple currently sells for.”

Cramer writes, “Indeed, the great mystery of Apple is how darned cheap it is vs. its growth rate. Apple sells at 26 times next year’s earnings estimate, with a 20%-plus growth rate. That makes no sense and reflects a belief that iPhone’s a joke like Microsoft’s Zune. It isn’t.”

Full article here.

36 Comments

  1. Breakout? Apple needs to breakout new (i.e. better and less expensive) cimema displays this summer, a suite of software that crushes Microsoft Office in 2007, and 45-nm chips in all Mac in 2008. I know, I’m just nostalgic for the days when Apple made Macs. But I don’t have a TV and I have no interest in an iPhone that cannot also copy, edit, and print documents wirelessly.

  2. Just waiting for my transfer to clear so I can buy more.
    Keep the price down a couple more days, analysts!!!
    Enderle, I haven’t heard anything idiotic from you in a while, get your head out of Bill Gates’s lap and write something! I need a buying opportunity!

    -c

    MW: ‘sent’ (but not received)

  3. Randian:

    I know what I want. Besides, I’m sure that Apple is quite aware than improving their lines of computer hardware and software is essential and that includes Macs, LCD displays, and software. I’m sure that the iPhone released in 2008 will be substantially improved and less expensive than the one in 2007. Would you consider this insightful and profound or, maybe, just an example of how good business operate?

    Your feeble attempt at sarcasm is lost on your acute ignorance of how businesses make money (i.e. designing and marketing ever increasing better and/or less expensive products). It doesn’t take someone with a MBA to understand that product improvement and lower prices are a draw for the consumer. Does this make sense to you or not?

  4. @rory,

    I totally agree.

    Cramer is giving value to Apple because of the “fashion” factor. To him, the reason someone buys a Mac is the same reason why someone pays more for a pair of jeans because of the label.

    That comparison applies perhaps to a Sony Vaio: an (arguable) better looking PC, but still a PC, with a crappy OS, and who knows what electronics inside.

    He does not understand that the main reason Mac lovers love Macs is the OS (and I keep saying that). The main differenciator is Mac OS X. Sure, Apple design is the best, and the computers are by far more beautiful than any PC. But that is a plus. Perhaps an important plus, but just a plus.

    I would say Mr. Cramer should keep with his stock picking wizardry and shut up about technology, a topic it’s evident he does not know a think about.

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