When Steve Jobs returned to Apple in 1997, the stock was stuck at $4, and Wall Street yawned. Turn the clock forward to May 2012, and the stock is hovering in the $530 to $560 range, with the stock topping the $600 level in March, up nearly 40% for the year. Could Apple reach $1,000?
First, what will Apple do with its $100 Billion cash hoard? Acquisition binges are not a trait of Apple, and some analysts have cautioned against Apple straying from being a product company, therefore the answer probably lies in product development.
With EPS of $35 and trading for a reasonable 18 P/E ratio, Apple is not outrageously priced, particularly in light of the fact the stock is now paying a $2.65 per share dividend.
After Apple announced first quarter 2012 results in March of $46.33 Billion in sales and doubling quarterly profits, it reclaimed its title as the most valuable company, edging out ExxonMobil.
And Apple does not seem to stop growing. An increasing number of analysts are projecting that, at the present growth rate, Apple will most certainly reach $1,000 possibly as early as the end of 2012, or at least in the next twelve months. Piper Jaffray analyst Gene Muster is even seeing Apple achieving $1 Trillion market cap by 2014. More conservative analysts are pegging the $1,000 goal as attainable in 2014.
What Is The Growth Engine That Will Spur That Lofty Goal?
As of April 2012, Apple had a market share of 18% of the smartphone segment, and is expected to grow that share to 30% to 34% by 2014, a huge jump considering that the mobile device market is expected to grow by 16.5% into the foreseeable future.Smartphones are finally coming of age and are widely viewed as suitable for business use, and with the Bring Your Own Device (BYOD) movement gaining traction, this notion does not seem as far fetched as it sounds. And Apple is set to release the much anticipated iPhone5 in June.
Apple recently added China Telecom as a partner carrier and it is rumored that China Mobile, the biggest mobile phone carrier in the world, is due to follow suit in the near future, bringing another possible 120 Million users into its fold, according to Katy Huberty of Morgan Stanley. Apple CEO Tim Cook in October 2011 professed to be amazed at the Chinese middle class growth that is clamoring for Apple products.
Still another widely anticipated product coming out of Apple is the new interactive TV, due to hit markets in late 2012, and Topeka Capital Markets analyst Brian White mused that this new product could conceivably present Apple with a $100 Billion opportunity.
Which product will lead? Smartphones or TV. The first is almost a given, and the jury is still out on the second.
Could Apple Reach $1,000?
A poll conducted by The Street found two thirds of 3,400 respondents as believing that Apple will reach that milestone, with the time horizons variously ranging from six months to three years.
Andy Zaky, a noted forward looking analyst, offered this projection: if Apple still trades at 14 times earnings by the fourth quarter of 2015, the stock will hit $2,000.
Could Apple reach $1,000, you say? We are waiting for your comments.