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“Because this stock is going higher. Much higher,” Willard asserts. “Probably to at least $350 per share before year end. And Apple’s gonna hit $1000 before 2015.”
Willard writes. “So wouldn’t you like to look back when it does and proudly tell people your own cost basis? Let’s dig into the fundies and market and see why I’m pounding the table once again on my old friend AAPL… Apple’s a screaming buy right here right now.”
Full article here.
It’d be fun to see where GOOG is in 2015. It’s at $470 now
Cody, lay off the crack, it’s rotting your brain.
Having looked at the about me page on Cody’s blog, I’m skeptical to say the least. These days, I don’t know how much weight I give a snot nosed nearly kid hedge fund manager – that personifiers… Good looks + a little hard work + meeting the right people = some degree of success. I don’t think Cody has the ability to make thus irresponsible prediction, it simply has no merit.
There are always nay sayers in the crowd. They must be Microsoft investors .
Without a doubt.
Meh. I’m inclined to believe Andy Zaky over Willard. Although, since I own the stock, I wouldn’t mind seeing the trendline start heading in that direction.
Cody is too early!
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By end of 2017 AAPL = $1000/share.
All it has to do is go up $100/year
Record Profits each year the last how many years now!!!!
Zero debt plus Apple has $46 Billion!!
New Products.
Apple Store global expansion.
Great management.
Zero Virus on Mac OS X
iPhone iPad iPod Touch = FaceTime
Buy AAPL
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Skeptical:
Not necessarily based on the snotty little wannabe kid, but on undervalued PE and fundamentals that are solid and horizons that are endless.
This guy was given a leg up by Jim Cramer. Another crook. While I like others would love to see Apple hit $1000, we need to ignore the nutters.
The bad economy is also helping drive Apple’s stock price up. Where else can an investor stick their money and make money? M$? Dell?
Apple continues grow and innovate which attract nervous investors but the idea of $1000 by 2015 is on the far side of sanity.
I won’t make any stock market predictions. There are too many factors that could drive the whole market (and Apple with it) apart from the fundamentals that could/should be driving AAPL, itself.
What I will say is that if these people are so sure of their own judgments regarding the stock market as a whole and specific stocks, in particular, then they would be quietly amassing a fortune by investing their own money (leveraged via options) and compounding crazy ROIs. Instead, they are showboating on TV or hawking their advice over the internet or via print media in an attempt to make a bit of cash and generate some celebrity cachet. These people all make money the safe and sure way – off of other people’s money…your money. And when they screw up and misjudge the risks, who do they turn to to bail them out from the consequences of their greed and excess? Once again, you and your money.
of these people who make these people who want to
Predicting the stock market is like betting on college football games, pretty stupid.
Wow, $1000/sh?!? I have been a long time AAPL fan and investor and am probably as bullish as about anyone out there but this seems a little crazy to me so let’s do some analysis.
Cody’s article is pretty much right on the money except for one statement, I believe:
“This, for a company growing earnings 20-30% per year and positioned to keep doing so for a decade.”
If this were true, I could make a solid fundamental argument supporting $1000 before 2015.
But AAPL is the largest tech company in the world by market cap and within a quarter or two will outpace every technology company on a revenue and earnings basis as well.
We all know what happens when you get to $60B+ revenue and $15+B in net income. There is the law of large numbers which starts to affect growth. Obviously, a company of this size cannot produce the same type of growth in the early years.
His prediction of $350 by year end is quite possible. He says AAPL is cheap and that I can definitely agree with.
Stocks in the long run trade on earnings and most often on projected future earnings. AAPL is expected to earn 17.48/sh in 2011. In NORMAL markets, stocks should trade at or above their growth rate which in this case is about 19%. So:
17.48 x 19 ~= 332 (plus $50 cash) = $382 / sh
Most analysts have their 12-month projection in the $350-$400 range and it is not hard to see the math behind this.
Whether or not AAPL gets to $350 by year end will probably be decided primarily on market psychology rather than AAPL fundamentals. It certainly deserves to be there now and the current global economic uncertainties are holding back stocks in general.
But $1000/sh before 2015? That would mean $1000 by 12/31/2014 which is only a little more than 4 years from now.
Being the largest tech company by all measures at that time, it is hard for me to see how the company could be trading a multiple more than 20 (I think 15 would be more reasonable). But let’s just say AAPL is trading at a PE of 20 and has $100/sh cash. So here is the math:
(EPS x 20) + 100 = 1000 implies EPS of $45/sh
EPS of $45/sh would mean AAPL needs to grow it’s earnings at about 33% per year every year for the next 4 years. This was obviously doable 6-8 years ago when AAPL was a fraction of what they are today. But I think keeping up even 20% earnings growth a year at these levels will be a HUGE accomplishment.
AAPL is no ordinary company, however. They have created $20-$25B (revenue per year) markets out of thin air within the last few years. But again, at these levels it is difficult to see how AAPL could achieve such growth in the next four years to get AAPL’s stock price to $1000.
Then again, there is the market psychology aspect to everything. Just as AAPL is clearly undervalued here, it is possible for AAPL and stocks in general to get overvalued. The mobile internet may very well end up being bigger than the introduction of the internet itself. If this happens, we may get a bubble like we saw in 1999. There is no telling what will happen to AAPL then.
However, on a fundamental basis $1000 before 2015 does not make sense to me. What does make sense? My conservative estimates are for 15% growth over the next 5 years so here is the math:
14.43 * (1.15)^4 = 25.24 EPS in 2014 and projected $29.02 EPS in 2015
On 12/31/2014, AAPL valuation should be based on 15 times 2015 earnings plus cash:
29.02 x 15 = $435.30 + (estimated $100/sh cash) = $535.30
I believe AAPL will most likely beat this conservative estimate but not enough for it to trade at $1000. At least not on a fundamental basis.
I hope Cody is right and I’m wrong because I might be able to retire if he’s right. But if you disagree with both of us, please support your argument with the math. I’m looking forward to other comments, feedback and predictions. And if you made it down this far in my response, thanks for reading!
All this is assuming that Obama gets thrown out and the stock market still exists. Be careful of gold. Remember the thirties.
This guy doesn’t understand how the stock market works.
And to think, I told my dad to get in back in December 2003 when Apple was at $18. Of course, he didn’t listen.
It’s a scam. It’s all just a big scam.
Cody writes: “I was also lucky enough to have bought Apple at $7 per share back in March 2003 just weeks before they launched the original iPod…”
But the original iPod was launched in October 2001.
29.02 x 15 = $435.30 + (estimated $100/sh cash) = $535.30
Sounds good to me. Basically that will be the year Microsoft dies or is bought in pieces.
@Stephen
It seems incredible, but I don’t know that it is necessarily on the “far side of sanity.” It may be a very remote possibility given the growth potential of the content and advertising ecosystem that Apple has created piece by piece over the past decade. It becomes a bit more feasible if Apple finds a lucrative way to get into the video/TV market.
According to internet resources, Apple’s current earnings per share (EPS) is $13.29 and its trailing price/earnings (P/E) multiple is 19.47, yielding its current stock price of close to $259. With 913.6M shares outstanding, Apple’s market capitalization is approximately $236B. Note that the EPS and P/E multiple do not appear to appropriately account for Apple’s debt-free status and cash hoard.
Apple has a lot of cash now – I recall having read that ~$50 (or ~20%) of its current stock price is supported by its cash and short term securities assets. At the rate that Apple is generating cash, it seems possible that Apple could increase this level to the equivalent of $100 or even $150 per share in five years. If you (and the rest of the investors) take that into account, that leaves at leaves $850 to $900 to be covered by the combination of earnings and P/E multiple.
Let’s assume a very reasonable P/E of 20 for AAPL (essentially the current value). Then EPS would have to be in the range of $42 to $45 per share, or a bit over three times its recent level. Is that possible? With Apple, I wouldn’t count it out, but I wouldn’t bet on it. If you speculate a P/E of 25, instead, then EPS would only have to grow to ~2.5 times recent levels to support that lofty share price.
I am not saying that AAPL is likely to hit $1000 by 2015. But it does appear to be within the real of possibility that AAPL could approach that goal given the manner in which it has diversified its hardware offerings and leveraged new revenue streams through the iTunes Store and iAds. If, over the next few years, Apple is able to produce another product or two in the league of the iPod, iPhone 4, or iPad, then who knows?
All I know is that my wife and I are hanging onto our very modest bit of Apple stock (few hundred shares) for the long term.
http://appleincanalysis.blogspot.com/2010_08_01_archive.html
The first TRILLION $$$$ company
I pumped my money into Real Estate when I could buy at 1/2 to 1/3 it’s previous value. I have rental income now and a good chance to at least double my investments in 2 to 3 years. Apple might match that, nothing else could.
@ Fundamental Analyst
Great piece.
To get some idea of the sensitivities here is a chart of what AAPL could be in four years.
The calculation is simply p/e multiplied by eps plus cash. I have set cash at an arbitrary 150 – to vary it just take or add what you think it might be from the result. The line above eps is the growth over four years needed to get the eps shown.
Using this we can see where the sensitivities lie. If the markets become ‘irrationally exuberant’ again, $1000 is on.
But if they don’t look at the growth rates needed to achieve what Cody predicts.
Cash 150
4% 10% 15% 20% 24% 28% 31% 34% 37%
eps 17 20 25 30 35 40 45 50 55 60
p/e 12 354 390 450 510 570 630 690 750 810 870
15 405 450 525 600 675 750 825 900 975 1050
20 490 550 650 750 850 950 1050 1150 1250 1350
25 575 650 775 900 1025 1150 1275 1400 1525 1650
30 660 750 900 1050 1200 1350 1500 1650 1800 1950
35 745 850 1025 1200 1375 1550 1725 1900 2075 2250
40 830 950 1150 1350 1550 1750 1950 2150 2350 2550
45 915 1050 1275 1500 1725 1950 2175 2400 2625 2850
50 1000 1150 1400 1650 1900 2150 2400 2650 2900 3150
Sorry guys – I should have realized the tabbing would all vanish when it was uploaded. Bit hard to read as it is.