“One thing that I think confuses investors about Apple (AAPL) is that it’s difficult to envision a company, any company, that can possibly be worth $1 trillion, let alone $2 trillion,” Richard Bloch writes for Seeking Alpha. “Here’s what I consider to be a fairly conservative scenario of how Apple gets to $2 trillion.”

“I decided to assume that iPhone and iPad sales will grow, but at a gradually reduced rate over the next four years. And I assumed the introduction of the iNBT (Next Big Thing). That could take the form of some TV product, or something else we don’t even know about yet – and that iNBT sales will start growing at a rate similar to the iPhone and iPad when they were launched,” Bloch writes. “So here are my projected revenues.”


Bloch writes, “Apple’s shares outstanding have been rising over recent years. I expect that to continue, probably surpassing 1 billion shares by 2016. But even assuming a rising share count, here’s how I expect trailing 12-month earnings per share to grow based on my revenue and margin assumptions. Although it may look overly optimistic, I’m actually projecting slower growth.”


Bloch writes, “I’m going to make yet another assumption that’s probably way too conservative. That the market gives AAPL a trailing PE ratio of 12. Even at that PE, which I would consider somewhat low. The stock price gets to $2,000 per share by 2016 and the market cap tops $2 trillion.”


Much more in the full article here.