"Apple will rise to $1,000 share price and $1 trillion market cap"

Apple: The $1 Trillion Company? http://blogs.wsj.com/marketbeat/2012/04/03/apple-the-1-trillion-company By Steven Russolillo

Apple’s meteoric rise is far from over.

Piper Jaffray analyst Gene Munster predicts Apple shares will reach $1,000 in 2014 and become the first company ever to have a $1 trillion market capitalization. Putting aside excessive investor exuberance, “we believe the real story is earnings growth,” Munster says.

Apple shares jumped 1.8% to $630 minutes after the opening bell and set another all-time high. The stock is up 56% this year and has a market cap of about $587 billion, according to FactSet data.

“Despite the law of large numbers, we believe the opportunity in mobile devices (iPhone and iPad) are big enough for Apple [to] grow earnings by 20% plus over the next three years,” Munster says.

He also points out 45% of iPhones sold through 2015 are “in the bag.” He bases his prediction on average iPhone life and user upgrade rates.

Apple fever has been in full bloom this week. Yesterday, Brian White of Topeka Capital Markets launched coverage of Apple with a four-digit price target: $1,001.00. He said he sees “no end in sight” to all the bullishness surrounding the company.

Munster, however, points out what could go wrong.

“The key risk to the Apple story is pace of innovation,” he says. “While we have not seen anything to make us believe innovation will slow, it is the fundamental barrier that stands between shares at $600 and $1,000.”

That said, the pros largely outweigh the cons at this stage of Apple’s game, he says. Here’s the kicker.

“While it seems virtually every investor (professional and retail) and analyst has something positive to say about Apple, the multiple on shares does not suggest there is excessive investor exuberance,” Munster says.

ya, AAPL news pretty much dominates “google finance” ever since it passed 500. I am currently 100% long in AAPL (I dont care about asset alocation at the moment), it is a bubble, so I set a VTSO on it…

If I understood you correctly, that means you own one stock, and that’s APPL?

Or are you levered too?

not levered. yes I hold only aapl, I have a small portfolio tho.

These articles have popped up about once a week for the last few months.

I like Apple, but I think the hedge funds are going to kill the retail investors at some point in the near future. It’s now the number one holding among the HF. When the market corrects and HF have to liquidate it’ll be Apple they’ll have to sell.

As long as Apple continues to produce awesome products the above scenario will represent a great buying opportunity. But, a lot of weak hands will get shaken out in the process.

Didn’t they say the same thing about Qualcomm? Perhaps this is the first indication of where the latest Fed-created bubble is forming. I give it 2-3 years.

good call Turd…got me trying to figure out how much , if any, money should be put on this…

Respect. I remember those headlines well. My boss at the time got in and basically got wiped out. Fool and his money…

Maybe Apple has the next decade in the bag, but maybe not. Remember when Sony was the most important brand in consumer electronics? Every kid had a Walkman/Discman and PlayStation was the best video game console. Now, not so much.

Technology stock prices can spike dramatically, but can decrease just as fast. It’s probably healthy to maintain some level of optimism, but be careful that you don’t get blind to the downside:


I like StL’s point, but not sure I agree with Turd Ferguson. Two points:

  1. Qualcomm was massively overvalued, Apple is nowhere close to that valuation. Qualcomm lost some money during the internet bubble burst, but most of the pain in revenues came before there was even a recession and revenues recovered rather strongly after the recession. I’m skeptical that Apple will have much luck developing new products without Jobs. The iPad is the best tablet now, but five years from now may not be (which could begin to effect earnings). Apple’s in a great position now, but their greatest risk is for their competitive position to be supplanted down the line, not that they are overvalued.

  2. The Fed can create a general boom in the economy. This boom may be stronger in some of the more cyclical sectors (tech, housing, etc). However, just because the economy is booming does not mean that these sectors are in a bubble (which is more about something being substantially overvalued, likely with a substantial psychological component). Further, you could never blame the Fed for a single company being overvalued. That’s ridciulous.

This reminds me of a story my granddaddy told me. Some kid was shining JP Morgan’s shoes and asked him, “Mr. Morgan, what do you think of xxx stock?” Mr. Morgan had no comment but thought if my shoe shiner is into this stock, it’s probably overvalued. He shorted the stock and did very well.


(Dons tinfoil hat): Not if you believe QEx is all about supplying bankers with capital with the implicit guarantee they’ll run up a few momo names - AAPL, NFLX, et al. Welcome to ZH.

/I like ZH

//ZH is generally favorable to AAPL. They’re still capitalist after all. Just anarcho-capitalists.

JM, was your #2 point supposed to be facetious?

Kind of a tangent here, but has ZH been right about any of its major themes?

Europe has not collapsed

China has not collapsed

The US has not collapsed

Gold is up – but they were on the gold bandwagon after it went up

We have not see hyper inflation

Probably others – I stopped reading a long time ago

In sum, that site adds no value. It’s a bunch of bitter arm chair investors incorrectly predicting the end of the world.

To the point of the thread, AAPL will probably go up for some time, but I would not buy any. All they have is brand. Eventually the brand will fade and they will be just another consumer electronics company in a tough market. It’s design or die with these companies, and by definition you can’t lead the pack forever. In ten years we’ll all look back and say, “Wow, remember that one time that AAPL was massively overvalued? Yeah, that was funny, I bet a lot of people lost money on that.”

Massively overvalued? Their PE is under 20 and their estimated forward PE is under 15,

If it goes to $1T it will be massively overvalued. There is no way that AAPL is the most valuable franchise in the world. That is impossible regardless of what the market capitalization says. It’s a branded consumer products company that had some neat ideas, but at the end of the day, they make basically commodity products that happen to be hot right now through some clever marketing. At some point they will no longer be hot and the stock will tank – it is virtually impossible for AAPL to stay on top forever. It could take years for that to happen and you can probably make money on the upside before then (very likely I would guess), but at $1T you are dreaming if you think that is not hugely overvalued.

@bromion re: ZH: It’s part of a balanced diet. The only theme that’s been a constant at ZH over the years is that fiat goes to zero and central planning doesn’t work. Both of those are multi-decade trends that I’d say they’re nailing so far.

When it comes to specifics, you’ve definitely got to wade through a sea of hyperbole but there’s some good info there. I’ve found, at least directionally, ZH is far more reliable than CNBC.

^ Good points, but is it possible for any company to stay on top forever?

When Apple crossed the $500b market cap number, I read an article about how historically all other firms that crossed over $500b crossed back to under $500b within a few months. I would bet Apple stays there for a while.

Clearly, if the stock goes to $1k with no change in financials it would be overvalued; however, I think the premise of the research that says the stock will rise to that level is based on revenue growth from the forthcoming Apple TV. If they can carve out a piece of the TV market (which is enormous) I wouldn’t be surprised to see the stock rise a few hundred bucks from here.

More reliable than CNBC – I would agree, but that is a low bar lol

Yes, some companies can stay on top forever and grow intrinsic value year after year. Coke is one that everyone knows. There are plenty of others. Apple is not one. I think they’re going to be on top for some time, but it’s a fad and it will correct at some point. If you’re nimble with a small position, it’s probably a long.

For those who cite “valuation,” have any of your looked at assumptions for earnings?

For the most part, the street is expect Apple to eventually sell 120 mil. iPads (annual run rate), 250 iPhones (annual run rate), double in market share for Macs in 2~3 yrs, and perpetual double digit growth in iTunes. Oh, and almost zero average price declines.

Not saying they can’t achieve that, but man that is some high ass hurdles…