Apple tops $132 after Barron’s predicts further gains

“Apple’s success with bigger iPhone screens has helped expand its stock valuation. The shares have climbed to $129 from a split-adjusted $76 since we recommended them nearly a year ago,” Jack Hough writes for Barron’s. “They now go for 14.8 times projected earnings for the next four quarters, up from 12 times.”

“The last time Apple hit a major peak, at about $100 in September 2012, its shares had a slightly lower price-to-earnings ratio than now, and a more diversified business mix, with iPhones making up barely half of sales, versus closer to two-thirds now. The shares went on to tumble 40% in less than a year. Might Apple now be topping out again?” Hough writes. “Unlikely. Look for the stock price to rise to $160 over the next year for a 25% return including dividends. Expect a big dividend hike when the company updates its capital-return program, likely in April. The current yield looks undersized at 1.5%.”

“Apple trades at an enterprise value — a measure that adjusts the stock market value for debt and cash holdings — of 10.1 times projected free cash flow for calendar 2015. That puts it on par with Hewlett-Packard , and makes it 11% cheaper than Microsoft. Companies like General Mills and Procter & Gamble), which investors flock to precisely for the ability to turn out steady cash, carry enterprise values closer to 25 times free cash flow.,” Hough writes. “A rise to $160 in a year would put the shares at 17 times forward earnings estimates, where the Standard & Poor’s 500 index trades today. Considering Apple’s understated earnings, its cash hoard, its avenues for growth, and its history of beating expectations, it’s time for the stock to carry at least a market valuation, if not a premium.”

Read more in the full article here.


  1. I still don’t understand why people aren’t running away from MSFT. The beleaguered holders of Redmond stock witnessed firsthand unparalleled and abject cluelessness yet still seem unperturbed by what their eyes revealed to them in full-blown technicolor.

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