Cody Willard: How Apple can get to $900

“If Apple earnings $60 this next year and $70 next year, and if the stock goes back to a 10 P/E multiple, plus you add what will be close to $200 a share in cash at that point even after the buy backs and dividends, you’d have a $900 stock sometime in 2014 or early 2015,” Cody Willard writes for Wall Street All-Stars.

Read all the latest insights from earlier in Wall Street All-Stars’s Platinum Chat Room on how to trade Apple Inc (AAPL) from some of the best money managers on the planet here.

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25 Comments

        1. It doesn’t make any sense except for the fact that it will cost Apple less than to repatriate the overseas cash.
          The cost of the increased dividends is minimal and can be handled by the current US cash flow. It is for the buyback that they will need to borrow money.
          At current rates, $60BB is equivalent to about 16% of outstanding shares. In the end though they may only buyback 10% assuming the price goes up. I really don’t see how that is going to help boost the stock price since the market has a way of discounting changes after a while and outrightly ignore fundamentals.

          1. I don’t know the laws in all of the countries that might be involved, but maybe Apple will do some of their borrowing overseas rather than from US capital markets. It may be easier to repay overseas debt with overseas cash.

        2. Apple can borrow at historically cheap rates. Repatriating foreign cash to pay out cash will cost Apple about 29%, based upon it having a US marginal tax rate of 31% and a foreign marginal tax rate of 2%. Using debt may cost Apple about 5% after interest and fees. Which is better, paying 29% or 5%?

        3. As I recall, Apple is planing on borrowing a little over $21B. It won’t take long for Apple to pay that off with U.S.-based profits. This is nothing to get excited about, BLN. The skay is not falling and Apple has not lost its vision or its soul. Your dramatic posts make you sound like a Mac diva.

          I still don’t understand why Apple can’t use their overseas assets to fund most or all of the stock repurchase. They could buy the shares at foreign stock exchanges and hold them. Perhaps the shares would not be “retired,” but they would be out of play in terms of public trading, and supply/demand would push up the price of AAPL as intended.

          By the way, by retiring AAPL shares through the stock repurchase program, Apple will be able to increase its dividend by another 10% or more without paying out any more money, in total. There is another potential bonus for the price of AAPL. Earnings per share will also increase by 10% plus (in addition to any growth), so even with a flat P/E the price of AAPL will increase.

          I am not a fan of debt. But I really can’t get excited about this. It is like Michael Jordan placing a $50,000 wager on a round of golf. For him, that is pocket change.

        4. I agree with you.
          No debt was Apple’s trade mark.
          I think it’s dumb. But if what you want to do is to pay your share holders then debt is the smart thing to do as the user below points out. How ever, what I am reacting to and probably you too Balmer’s left but is that it’s a stupid use of cash in the sense that Ape could have done something more productive with it… Buy backs are retested in my opinion and in 99% of cases ads in value. Dividends are much better use of cash than buy backs. But investing the cash is even better than dividends. How ever. Apple got enough cash to do what ever it wants even after announcing the biggest buy back program in US history and they generate more all the time. So hopefully we will see some great aqcusitions soon and in the future.

    1. Zaky is probably still in shock from Samsung’s massive short positions on Apple and scum camgaign, that created a bogus Apple decline. Never saw any predictions from him this time…

      1. He probably can’t pay taxes from where he is hiding out. If those investors he duped ever got ahold of him, paying taxes would not enter his train of though before that angry mob ripped him to shreds. I guess I’ll never hear him again telling his followers to sell their cars and mortgage their houses to buy Apple, because Apple is going straight up. Unfortunately, he had the direction wrong. It went straight to hell.

  1. Isn’t strange how these stockheads goes on. Apple doesn’t care about some f*ckin 900. Tim Cook said, once again, that the only thing Apple care about is creating insanely great products that change peoples lives.

    1. I don’t think a publicly-traded company shouldn’t be that narrow-minded as not to consider shareholders. In theory, good selling products should produce good financial results and those results are somewhat passed on to shareholders. Apple shareholders are getting dividends now so we are getting something back. It’s just odd why Apple should always be the exception of not holding on to share price increases while the rest of the stock market does. I’m not asking for $900. $600 seems fair enough. I’m expecting a fair valuation of with a P/E of around 13-15. Microsoft’s P/E is close to 16 and Apple is only worth half that much? That’s not rational.

  2. as much as analysts try to make positive feed, APPL will fall even further. it is totally opposite nowadays. once apple stock falls, it won’t make any miracle. it stays the point which was fallen. then it keep that line, and drop again. it is pattern for past 6 months. unfortunately, it won’t change.

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