“We all saw the passing ships last week. A buoyant Apple (AAPL) overtook a diminishing Microsoft (MSFT) to become the country’s second-most-valuable company in terms of market cap,” Rick Aristotle Munarriz writes for The Motley Fool.
“The only sensible thing to do right now is load up on Apple and dump Microsoft,” Munarriz writes. “Heresy? Blasphemy? Truth.”
“Shares of the Cupertino cult leader have more than tripled since bottoming out 17 months ago. The stock is nearly a 20-bagger over the past six years. Equities that rack up significant gains often carry bloated valuations, but that’s just not the case with Apple. It’s more than earned its upticks, as its attractive earnings-based multiples attest,” Munarriz writes. “Apple is fetching less than 20 times this fiscal year’s projected profitability, based on last night’s close. The company’s trading at a reasonable 17 times next year’s bottom-line estimate.”
Munarriz writes, “Oh, and keep in mind that Wall Street’s expectations are a moving target. Apple has consistently smashed through analyst models, forcing the pros to revise their numbers higher.”
“Close your eyes. Imagine where Apple will be in three years. Will there be more iPhones out there? There should be. Even before considering an international push, the inevitable end of AT&T’s exclusivity will make this a game changer for Verizon and any other carrier fortunate enough to market the smartphone that everyone secretly craves. In the meantime, iPhone revenue still soared 124% in its latest quarter,” Munarriz writes. “After selling 2 million iPads in less than two months, the future seems bright for Apple’s latest drool-worthy gadget.”
“iPod unit sales suffered a 1% year-over-year decline in Apple’s latest quarter, but the average price per unit rose sharply, pushing revenue growth into the double digits. Besides, since higher-priced iPhones and iPads double as iPods, this is still technically an expanding market,” Munarriz writes. “Then we get to Apple’s roots in computing. You’re not hearing a lot about Macs and MacBooks, but Apple sold 33% more computers during its latest quarter than it did a year ago.”
Munarriz writes, “Whether Apple’s innovative products carve out new markets or cannibalize existing ones, the company has found itself during Wall Street’s lost decade. You’ll be surrounded by more iPhones, iPads, and Macs in three years — I can practically guarantee it.”
Much more in the full article here.