Why Apple Shares Will Hit $500 This Year

Why Apple Shares Will Hit $500 This YearApple's (AAPL) earnings per share nearly doubled to $6.40 in the last quarter, and revenue rose 83% to $24.7 billion -- and the figures for Apple's previous quarter were almost as good. But Apple's shares are only up 11% in the last six months, a growth rate that trails the Nasdaq's 13% rise over the period. Even the stock of also-ran smartphone maker Research In Motion (RIMM) is up by about the same percentage as Apple's over that time frame.

But things may be about to change. Apple's stock may even hit $500 by the end of this year, which would be a 42% improvement. Here are a few reasons why:

• One of the most amazing things about Apple is that demand for its products doesn't appear to be falling at all. COO Tim Cook and CFO Peter Oppenheimer said demand for the iPad 2 was so great that the company was selling every unit it made and would like to improve its manufacturing capacity. They made similar comments about the iPhone 4.

• Apple says that parts supplies from Japan are not a serious issue. Investors were concerned that shortages after the earthquake and tsunami could hold back manufacturing capacity.

• iPhone sales in China rose by 250% last quarter. Some analysts expect that rate of growth to rise in the quarters ahead. China is by far the world's largest market for handsets, and 3G capacity in the People's Republic is growing quickly.

• Mac sales are growing by double-digit percentages, and units sold hit 3.8 million last quarter. Sales of most PCs have tapered off in the last quarter, but the Mac continues to pick up market share despite its relatively high price.

• Apple is close to becoming the largest tech firm in the U.S. with a revenue run rate of $100 billion and profit run rate of $36 billion. That would make Apple as large as Hewlett Packard (HPQ) and IBM (IBM). The difference is that Apple's growth rate is above 75%, while the growth rates of HP and IBM are in the 10% range. Apple's relatively narrow range of products is doing better than the broader offerings of the other two companies.

• Apple is likely to bring out the iPhone 5 in the fall, and the iPad 3 may not be far behind it. Each time Apple launches a major product upgrade, sales surge.

• And finally, Apple hasn't even introduced any 4G capable products yet. That market is increasing rapidly as the sales of the HTC Thunder Bolt show. In some Verizon stores, the Android-based smartphone outsells the iPhone 4. Verizon (VZ), AT&T (T) and Sprint (S) have only begun to aggressively market 4G in the last few months. Apple is likely to enter the market in the next year.



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usermmm2739

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April 28 2011 at 10:12 AM Report abuse rate up rate down Reply
Joe Mosgkowicz

I hope god reads this story and it goes up to 500

April 24 2011 at 11:16 AM Report abuse rate up rate down Reply
svvalkyrie

To protest the high price of gasoline, NO ONE is to buy from EXXON. A one day shut down can't work but if we all avoid one company, just watch what happens. Thanks, remember we're not Lybia or Syria so we'll get no support from Washington.

April 23 2011 at 7:32 AM Report abuse +1 rate up rate down Reply
Harley

keep away from this stock its gonna fall soon

April 23 2011 at 12:01 AM Report abuse -1 rate up rate down Reply
gritzsl

IF Apple is in fact tracking ever move IPAD and IPHONE users make they should be taken to court, required to dump all the data collected in addition AAPLE should be required to REPLACE EVER IPHONE and IPAD with a new version with all tracking software and chips removed. This would be hugely expensive but AAPLE has opened themselves up to a major problem. On top of the replacements they should be required to pay every consumer a sum of money for the damage they may have caused. Simple this could put AAPLE out of business. They have breached the trust given them by consumers. Once that trust has been lost it will take years to get it back.

April 22 2011 at 10:22 AM Report abuse rate up rate down Reply
keangkla

....

April 22 2011 at 4:45 AM Report abuse rate up rate down Reply
tropicsilk

Qe2 is taking on water. All the lifeboats will be full by June. Start the presses Captn. Ben full steam ahead.

April 22 2011 at 3:50 AM Report abuse -1 rate up rate down Reply
Sam J. Achilli

This guy is a switch hitter. He used to be an APPLE basher..... Now he is a HUGE supporter... Another Teflon Don........................ I wouldn't listen to a word he syas or advises............

April 21 2011 at 9:09 PM Report abuse rate up rate down Reply
jokesl3

For a real treat, go to U.S. Debt Clock.org. The debt flies ahead like the numbers on H.G. Well time machine. You will find the real unemployment numbers on this site. If you do the math, official unemployment is 9.5%, the rel number is 17%. It also says there are about 82 million families in the US. There are 44 million food stamp recipients. Look at the bottom of the page for the amount we are really in debt. It is unbelievable.

April 21 2011 at 8:35 PM Report abuse -1 rate up rate down Reply
amani4000

Hey Tucker, As an American consumer who has sold all of his stocks in 1992 and invested in cash. Sell Sell Sell!! Betray my privacy to whoever without my consent, what a shame. Watch what happens next!!

April 21 2011 at 6:03 PM Report abuse +3 rate up rate down Reply