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Apple Share Price Breaches $500, Hits All-Time High

Xscapes said:
Can AAPL jump to $600 per share(by the end of year) if iPad 3 and iPhone 5 out this year?
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Anything is possible. It could be $750 by the end of the year if past performance continues....it's up basically 145 points since one year ago.

It could be up past 800...or down closer to 300. There are no guarantees.:(
 
AAPL is not over valued.

Bespoke Investment Group takes Apple’s $500 price as an opportunity to consider how the tech giant is priced compared with other technology and retailing companies.

At $502.50, Apple AAPL 0.07% is trading at 11.8 times expected earnings for the year.

By contrast, the S&P 500 SPX -0.30% is trading at 13.5 times forward earnings, on a weighted basis.

Bespoke also compares Apple’s P/E with a selection of traditional tech stocks such as Intel INTC -0.37% , Cisco CSCO -0.45% , and Yahoo YHOO -0.28% . In those cases, the valuation of Apple ranges from $459 to $803, depending on which P/E you choose to apply.

Bespoke also compares Apple’s P/E with Amazon’s AMZN 0.00% (77.8) which would yield a price for Apple of $3,346.50 a share; and Netflix NFLX 0.57% (422.5) which would put Apple’s price at $17,947.80.
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h00ligan said:
I agree, which is why I don't use one or two stocks as an entire strategy. When I enter into a large (for me) trade I do so with familiar products. But there's an underlying reason for the long term diversified investments and the shorter term ones.

Trading is good in addition to investing. Or can be,.it just depends. Many people invested in Cisco and lost nearly everything....at the time it was a good investment. They just stayed in...trading would have made a bundle.

As mentioned a couple of posts up...emerging markets are huge for apple.

The idea that one would invest in a company today and not reevaluate it in ongoing fashion is ridiculous. If everyone who isn't in a stock for twenty years is a trader...well there aren't many investors.

I'm in apple as long as the company and valuation look sound to me. If I think the stock is massively overvalued I'll sell and renter when it's not. I the company makes decisions I think are bad, I'm not sticking around ten more years.

That's not short term investing, it's common sense.
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You seem to be misinterpreting what I am saying. A sound investment strategy is based on a company's fundamentals, which is another way of saying, their ability to grow their earnings and thus the value of their common stock. If you have a good reason to change your feeling about these fundamentals, then it makes sense to buy or sell. If your investment goals change, then that is also a good reason to buy or sell. But if you are trying to time temporary swings (perturbations) in stock price that occur constantly as a matter of course, then your timing will be wrong at least as often as it is right, and your returns over time will be less than if you just held your course.

We've had so many lessons in this over the last 10-12 years that this lecture should not be necessary for any experienced investor, but beyond that lots of scientific analysis backs up what I am saying.
 
rdowns said:
AAPL is not over valued.
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I sort of agree, but this is such a loaded term, I have to object to its use in such a definitive way. The markets through pricing mechanisms determine on a moment-to-moment basis whether any given stock is over or undervalued. The verdict changes all the time.

Over the longer haul, we've seen the multiples for AAPL compress steadily for about 4-5 years now. For many years the markets valued AAPL at over 100 times earnings. Now it's around 15 times. I defy anyone to tell me what this means, precisely, or even generally -- let alone what it means for the future of the stock's price.
 
IJ Reilly said:
I sort of agree, but this is such a loaded term, I have to object to its use in such a definitive way. The markets through pricing mechanisms determine on a moment-to-moment basis whether any given stock is over or undervalued. The verdict changes all the time.
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I agree as well.

Right now, AAPL is valued exactly where the market thinks it should be valued.

Could it go higher? Sure, other similar stocks have set precedent for it to do so. Could the P/E compress even further? Sure, if the market dictates it.

Maybe AAPL is properly valued and all the other examples are wildly over valued?

If P/E were the end-all-be all of trading, we could all be trillionaires by buying any and all the smaller P/E ratios knowing that they were all 'undervalued', no?
 
IJ Reilly said:
I sort of agree, but this is such a loaded term, I have to object to its use in such a definitive way. The markets through pricing mechanisms determine on a moment-to-moment basis whether any given stock is over or undervalued. The verdict changes all the time.

Over the longer haul, we've seen the multiples for AAPL compress steadily for about 4-5 years now. For many years the markets valued AAPL at over 100 times earnings. Now it's around 15 times. I defy anyone to tell me what this means, precisely, or even generally -- let alone what it means for the future of the stock's price.
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I agree with you but it is a factor many consider when investing. Perhaps I should have wrote that Amazon and Netflix are over-valued.
 
mstrze said:
I agree as well.

Right now, AAPL is valued exactly where the market thinks it should be valued.

Could it go higher? Sure, other similar stocks have set precedent for it to do so. Could the P/E compress even further? Sure, if the market dictates it.

Maybe AAPL is properly valued and all the other examples are wildly over valued?

If P/E were the end-all-be all of trading, we could all be trillionaires by buying any and all the smaller P/E ratios knowing that they were all 'undervalued', no?
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Yes, but I take all valuations to be "proper," since there's no other mechanism for valuing a stock than the markets. Now, if you're trying to predict the future, then that's a somewhat different exercise. In attempting to predict what a stock will sell for in a year from now, all you can use to come up with a number is an estimate of earnings over the coming year and a forecast for multiples. Those are really your only two variables. For AAPL, based on years of steady PE compression and a PEG around 0.5, I think we can safely say that the stock can move up by about half of the earnings growth rate, all other things being equal. Which they rarely are!

rdowns said:
I agree with you but it is a factor many consider when investing. Perhaps I should have wrote that Amazon and Netflix are over-valued.
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Well... by that analysis AAPL was just as over-valued as those other two stocks during the mid-2000s, if not more so. Did that make AAPL a stock to avoid in that timeframe?

A tricky business, this is. That's why I am so adamant about keeping an eye fixed firmly on a company's fundamental growth picture. If their earnings are growing weed-like, then high multiples can be fully justified. It depends entirely on whether you buy the fundamental growth story. For Apple, I did -- personally I am far more skeptical in the case of Amazon and Netflix.
 
IJ Reilly said:
On very heavy trade, in an otherwise mixed market. Yikes.
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Investors apparently liked what Tim Cook had to say yesterday at the GS conference.

Barron's take on it:

Shares of Apple (AAPL) are up $12.84, or 2.5%, at $522.30 this morning after an appearance yesterday afternoon by chief executive Tim Cook yesterday at the Goldman Sachs technology conference, where he was interviewed by Goldman hardware analyst Bill Shope.

The takeaway is that Cook’s remarks on the prospect of a dividend — he didn’t commit to anything but indicated a willingness to consider all options — and his discussion of the AppleTV product, are tantalizing hints at future actions.

For his part, Shope, who has a Buy rating on Apple shares and a $600 price target, in a note to clients this morning, writes, “We viewed the presentation as a positive catalyst for the stock […] The company appeared remarkably confident in its incremental growth opportunities, and management seemed increasingly willing to explore a dividend or buyback.”

Shope went through each of the points brought up in the discussion:

“Product innovation remans the core strategy and the company remains focused on making a select few products”

Mr. Cook noted that supplier relationships and employee working conditions remain an area that the company will continue to aggressively monitor, and the company will remain transparent about any violations it uncovers
With only a 24% share of the smartphone market and less than 9% of the handset market (in a peak seasonal quarter), Apple stressed that the size of the mobility market can field far more growth.

Emerging market growth is taking off beyond the iPhone because of the “halo effect” from the iPhone, driving Mac and iPad sales.

Mr. Cook continues to believe that the tablet market will ultimately exceed the size of the PC market.

Siri and iCloud are “profound platform enhancements” and “Siri has proven to be a significant factor in driving adoption of the new iPhone 4S.”

“Pointing to the company’s historic judicious and deliberate use of cash, Mr. Cook asked for investor patience as the company decides on what is in the best interest of shareholders.”

Regarding the discussion of AppleTV, Shope reiterated his own view that Apple “may be preparing to introduce a television in late 2012, early 2013″ given that “Mr. Cook hinted that they would need something more to go after this market more aggressively.”

R.W. Baird’s William Power, who has an Outperform rating on Apple, raised his price target to $600 from $550, “on what we continue to view as an attractive valuation and, in our view, the increased likelihood of a dividend.”

Apple’s CEO Tim Cook indicated that the board of directors continues to focus more time on the use of cash, which seems to increase the likelihood of a dividend and/or stock buyback. We continue to believe that even a conservative 2% dividend yield could help attract an additional wave of investors.

Jefferies & Co.’s Peter Misek, who has a Buy rating on Apple shares and a $599 price target, writes that “Tim Cook hinted that a bigger successor to the Apple TV is coming.”

“Also, he noted that capital allocation plans are actively being discussed. We continue to expect a dividend announcement later this year.”

Regarding the dividend, Misek elaborates:

On the dividend front Cook asked for time as the company likes to approach its capital allocation decisions “judiciously.” We believe it confirms our suspicion that a dividend is coming in H2:CY12.
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rdowns said:
Investors apparently liked what Tim Cook had to say yesterday at the GS conference.

Barron's take on it:
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In the Huge Irony Department, I believe investors are going to like Cook's clear intention to play a more open hand than Steve ever did. Even this slight lean in the direction of a dividend has investors excited, and for good reason. I think the recent run-up has more to do with this than any broader hints about future products. Most of the TV related stuff has been on the street for awhile and he really didn't say anything we hadn't already heard on that subject.
 
Also large movement to buy or increase in hedge funds. Everyone wants to get 10-15% added to the year. It seems most believe $600 is around the corner.
 
42.3 mil volume

No stock gains every day.lthe question is, will the panic now come.

Phrases like aapl collapses...

Why isn't anyone talking about googles decline today, pretty similar. Is google collapsing?
 
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Thanks for that link. It's definitely been a crazy day for aapl. I wouldn't be surprised to see it recess further, only to have another huge gain in a month or so.
 
h00ligan said:
42.3 mil volume

No stock gains every day.lthe question is, will the panic now come.

Phrases like aapl collapses...

Why isn't anyone talking about googles decline today, pretty similar. Is google collapsing?
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The markets are very emotional by their nature and stocks that sprint up are bound to have these periodic shakeouts. If you are an investor not a trader then you are not worried about these little conniption fits.
 
IJ Reilly said:
The markets are very emotional by their nature and stocks that sprint up are bound to have these periodic shakeouts. If you are an investor not a trader then you are not worried about these little conniption fits.
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Correct. Things would have to change drastically for me to sell in 2012.
 
I think the reaction to today's losses will be interesting. Will people buy and have faith or rethink and take profits....

Interesting to see. I may add to my position if there's a continued downward trend.
 
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