“If Apple was valued as CNBC’s Jim Cramer sees it — ‘the greatest consumer products company in history’ — the stock’s price target would be $300 a share, the Mad Money host said Tuesday,” Elizabeth Gurdus reports for CNBC.
“Speaking after Apple reported a third-quarter earnings beat driven by continued strength in its service stream revenue, which grew 31 percent since last year, Cramer again made the case for the company’s budding razor-razorblade model,” Gurdus reports. “‘Given the rapid growth of that service stream, this company deserves to sell at a price-to-earnings ratio that is more like a consumer packaged goods company,’ he said as Apple’s stock popped more than 3 percent in after-hours trading.”
“Cramer lamented the fact that Apple is valued like a ‘sturdy, cyclical industrial’ at just over 17 times next year’s earnings estimates. Instead, he said, it should be on par with top consumer goods stocks, which tend to trade at mid-20s multiples,” Gurdus reports. “‘In fact, [Apple] should be covered by the same analysts that cover a Procter & Gamble, a Clorox, a PepsiCo, a Colgate, because if it were, I could argue it should be valued at well north of $280 instead of about $200, where it is right now,’ the Mad Money host said… ‘The organic growth of these so-called steady-eddie companies is nowhere near that of Apple,’ he said of the consumer packaged goods plays. ‘The cash return to shareholders is nowhere near that of Apple. The brand loyalty is nowhere near that of Apple. The worldwide pervasiveness is fractional versus Apple. That’s how I could explain how the stock should have a $300 target, not a $200 target, which I think it’ll eclipse tomorrow,’ he continued.”
Read more in the full article here.
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Totally agree with Cramer; who wouldn’t!!
OMG it HAS eclipsed $200 but investor doofuses will no doubt crash it back shortly to the $180-190 range. North of $200 makes me a happy Apple stock owner, even if only temporarily. (But hope springs eternal.)
“will no doubt crash it back shortly to the $180-190 range”
Eh, no. The intraday low for this period (ending with January Earnings) will be $195 (excluding tsunamis in Japan, massive earthquakes in California, oil embargoes, an all-out trade war with China, etc.
I mean in a few more weeks or months.
I’d noticed that at $201.xx a share, Apple’s market cap had actually reached $990B. Just a measly $10B short of a TEE-rillion bucks. Man, that’s close. No big deal. I’m just saying. However, that’s based on 4.92M outstanding shares and I think Apple has recently dropped to around 4.8M outstanding shares, so the current market cap is a bit too high.
There’s one way that Apple would blast past $200 in an instant.
I’d think that might destabilize the company as it seems too drastic. Apple’s new value might be totally dependent upon who replaced Cook. I’ll stick to another means at this point such as a new product or services category to make the stock move higher.
It already did and no one fired anyone.
Happy to see Apple there.
In my opinion, Apple should be over 300$ mark nowaday. Anals-yst have been doing good work for the past 5 years. Their narrative is getting tired now… Lets see…
Apple will remain valued as that ‘steel mill going out of business.’ Why would anyone come along and suddenly change how Apple is being valued? That’s just too easy for long-term, loyal Apple shareholders to benefit from. It’s Apple’s fate like how Spotify is probably being valued a lot higher than AppleMusic even though Spotify isn’t making much money and never has. What has Spotify going for it? A large and growing subscriber base which still isn’t guaranteed to keep Spotify in the black. Spotify has climbed from around $135 to as high as $196 with an EPS of -9.xx. C’mon, that’s just not right.
I wish I hadn’t listened to Cramer’s consumer product scenario for Apple. It certainly can’t be that easy for Apple to gain in value and I’m sure that’s not going to happen or else it already would have happened.
No ‘one’ individual is going to change Apples valuation.
But the collective sentiment will give it a higher PE. Imo ,.. if Apple can continue to impress like they did yesterday and show seriouse growth in diversified areas and services and subscriptions.
I personaly belive Apple deserves a PE of at least 25 right now. . ( anything above 30 will be kind of scary for me though…. but who knows lets where this ship sails )