“Imagine if shares of Apple, which currently fetch about $345, were to increase by 30%, to $450. Apple’s stock-market value would then surpass ExxonMobil’s, making it the most valuable company on earth,” Tiernan Ray reports for Barron’s. “I say imagine because it’s rather fantastic to think of a consumer electronics company pushing aside a company with oil, and because it’s hard to imagine Apple’s shares going anywhere these days.”
“The stock is up about 7% this year, just even with the Dow Jones Industrial Average—hardly what one would expect for a company that created a new market overnight, the tablet computer craze, with its iPad business expected by some to be worth $17 billion this year,” Ray reports. “That’s $17 billion in revenue, out of thin air.”
“Moreover, backing out cash and marketable securities of $60 billion, or $64 per share, Apple shares aren’t just cheaper than the S&P, they’re bizarrely cheaper,” Ray reports. “It trades at 11 to 12 times this year’s projected earnings per share, versus the S&P’s average of 14 times, despite EPS growth projected at 52% this year by analysts.”
Ray reports, “In fact, there is a plausible path to seeing the shares rise into the ExxonMobil neighborhood, but it is the awesome scale of Apple that lately seems to sharpen for some investors all the things that could go wrong.”
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