Apple’s best days may be yet to come

“In the marketplace, Apple (AAPL) has transformed itself several times, from a money-losing, miscalculating maker of home computers to a creative curiosity and ultimately to a technology juggernaut. It will no doubt transform itself again as it invents and improves its products,” Dave Roeder reports for The Chicago Sun-Times.

“For investors, AAPL also is an evolving story. It’s classified as a ‘large growth’ stock, which means that it’s seen as a company with its best days in front of it. The price of the stock is supposed to reflect prospects rather than current results. And the current price of the stock, $320.56, seems rich to many,” Roeder reports. “But is it really? Based on price-earnings measures, Apple doesn’t trade at much of a premium compared with its tech brethren and it’s about even with the average for the S&P 500, even though it’s growing much faster than most companies in that index.”

Roeder reports, “Many analysts who follow Apple believe the shares will head higher despite having been on an incredible ride. AAPL was less than $100 a share in early 2009. Robert W. Baird & Co. analysts last month issued their first report on Apple, concluding that the company supported a price target of $410 a share.”

Full article here.

25 Comments

  1. How long in this thread before someone comments about how ‘it’s time” for a stock split?

    And yeah, I think AAPL could ride much higher when you consider their share of the worldwide PC market is still very small.

  2. Apple stock on Wed, Dec 10, 2008 – $100.06, Wed, Jun 10, 2009 – $140.25, Mon, Jan 11, 2010 – $210.11, Fri, Jun 11, 2010 – $253.51
    and yesterday Sat, Dec 11, 2010 – $320.56. I would say the growth is darn near extraordinary and in line with $400 per share in the future.

  3. One o’ these days the _market_ will actually “get it” and price Apple in line with the analists. Until then Apple will always be the first stock to get hammered in profit-taking sessions and not valued appropriately.

  4. “Based on price-earnings measures, Apple doesn’t trade at much of a premium compared with its tech brethren and it’s about even with the average for the S&P 500, even though it’s growing much faster than most companies in that index.”

    That is what many of us have been saying. Reality finally finds a grip in the media.

  5. Apple will continue to succeed and grow because of two factors.

    One is MONEY. Even without its huge cash hoard, Apple has money from ongoing profits that few in tech can come close to matching. The competition is always trying to catch up to Apple and Apple has the funds to out-spend the competition, if needed, to stay ahead and introduce new innovations at an ever-faster pace. No will be able to afford to compete against Apple.

    The other is STRATEGY. Money isn’t everything. Ten years ago, it was Microsoft who had all the money; Microsoft still has plenty of money. Yet they lost that advantage because their primary strategy was (and still is) to copy what has been successful for others and try to take over through brute force. Even Apple, in Steve Jobs’s absence, tried to succeed by being more like Microsoft, and almost went bankrupt. In contrast, Apple (after the return of Jobs), seems to intentionally avoid copying anyone else. Apple creates new major markets categories (iPod and iPad) OR enters well-established markets in a new way (iTunes Store for music retailing and iPhone) and redefines them.

    Being “first” allows Apple to use its resources efficiently, because they can start relatively “small-scale” and keep adding new features and upgrades over time. So the iPod starts as a simple 5GB digital MP3 player for Mac only; then Apple adds the Windows support, the iTunes (Music) Store, color display, video playback, ever-increasing storage, etc. The iPhone starts out on EDGE (no 3G), with no third-party apps and multi-tasking limited to what Apple allowed; then Apple opens the App Store, upgrades to 3G, allows third-party apps to multi-task, improves camera capabilities, and gradually adds many more features. iPad (and probably Apple TV too) will follow the same path.

    The copycat competition must match whatever Apple has done up to that point (over several years), and release it ALL on DAY ONE, or their product fails to meet customers’ expectations. And they have months to do the development instead of the years. For example, a new smart phone platform such as Windows Phone 7 is expected to have third-party apps and a well-stocked “app store” immediately. And their product must be priced lower than Apple’s established product, or the consumer has no reason to choose it. Doing all of that is very difficult and VERY inefficient.

    Meanwhile, as everyone else flails about trying to copy Apple’s “next big thing” as quickly as possible, Apple keeps making more money while using that money more efficiently. So yes, I think Apple “best days” are in the future.

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