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Can Apple (aapl) double again, and even become the biggest company in the world soon (by achieving top market cap valuation)?
That would mean the stock doubling at least two more times! Also, the hidden implications that the iPhone has made the ubiquitous, annoying cell phone an actually sexy, heroic phenomenon. Those of us who own one know what of I speak. Rather than an annoyance, we are sought out, conversationally and often after smiles greet our ringing iDevices. And for aapl the stock, THAT speaks volumes!
Apple (aapl) historically has fired on enough growth cylinders to propel their engine of growth forward sufficiently to power the stock to ever loftier valuations. The question we ask ourselves repeatedly is how long will this dynamic endure?
I think for at least six months, maybe a year or two. The specifics are important and will self-evidently manifest themselves in the hand revealed by Apple to the rest of the "gaming table" participants- investors, competing tech companies, and the analysts who are increasingly getting hip to aapl at the institutional level, and not coincidentally using the products themselves more and more. I don't think the stock is over-cooked yet, because there are forces and factors at play here that in high probability will give aapl a decisive edge for years to come. In fact, aapl is likely to remain a high-momentum growth stock for some time.
Of course, for this to happen the numbers dictate they would almost have to end up being the biggest company in the world by stock market valuation. And that would be impressive indeed considering the relatively tiny market share of overall computer sales they currently enjoy! Then again, they did recently drop the word "Computer" from the name.
I have read many technical analyses of this or that area of this company's prospects going forward, yet few have been able to peer sufficiently into the Apple crystal ball in order to really comprehend the impact their ongoing secret plans behind the scenes facilitate. And so I think it will go with their latest products releases and for at least a few years to come. It is not really a question of IF aapl will sell enough iPhones, iPods, computers, and so on. Nor if they can maintain sufficiently rosey margins and innovations to stay atop and ahead of the competition. Or come up with another revolutionary or evolutionary industry disruptor.
That said, can aapl double then double again in the near-term? I think so, because my experience with the iPhone, MacBook Pro, iPod, iMac, Mac duo-tower, high end Cinema Display and the incredibly smoothly integrated Apple software that keeps it all humming is only now catching full-wind on the seas of emerging techno-lifestyle habits, and therefore being factored into the stock's future trajectory with sufficient gravitus. This company is positioning itself in the sweet spot of the telecommunications and media industry.
After using my iPhone for several months now, and experiencing the reactions of others to my using it- I think the implications of what aapl is doing here go way beyond the current crunching of data analysis, in order to comprehend just how revolutionary and disruptive this company's forays will be to early 21st century communications. This being the case, Apple's (aapl) convergence insurgence will result in ongoing earnings surprises and a substantial stock appreciation over the next 12 to 24 months, barring unfortunate wild-card developments (such as Steve Jobs getting in big trouble over options, etc).
Will kids- teenagers, twenty- somethings increasingly buy iPods and iPhones in impactful numbers? Yes! As will many of their parents, who will also get the family into Mac laptops, desktops, and loads of software. They will download more iTunes, movies and TV shows, and buy lots of accessories. And aapl's market share will continue to grow quarterly. Because they currently have such a small market share, this is good news indeed. And what will be their next big insanely great new tech product? Could anyone foresee the iPod, let alone the original Macintosh computers and earlier models?
In the meantime, you will see more iPhones popping up in consumers' hands and pockets in an escalating sliding scale of consumer purchases, and the numbers will impress. Not only in the U.S., but increasingly around the world, and they will improve with every version thereby selling in larger and larger numbers. They get fashion, they get sexy, and consumers won't be able to resist splurging, by and buy.
And there is a good chance that business oriented people the world over will increasingly snap up the next few versions of the iPhone, which will continue sporting more and more essential new features necessary to the business class of buyers. That hasn't stopped me from using the heck out of my iPhone in ways that have payed me back many times the purchase price as a profitable business communications pocket device in a few short months.
But what we're talking about here first and foremost is Steve Jobs and company's ability to discover, develop and market the next insanely great consumer tech must-have toys and tools to an extent rarely achieved by any other company. And in such a highly fluid and integrated manner that competitors are often left scatching their heads in befuddlement. And Apple is in fact doing this with a promotional acumen that is unsurpassed. In other words, Mr. Jobs understands what it takes to motivate the money each stage through the process from product development, production costs relative to margins and volume, then the ability to make the necessary adjustments to keep the story fresh yet simultaneously dangerous. Execution has historically been near flawless since his triumphant return as company head, even when it initially appears otherwise (see my earlier blog on the iPhone price reduction "oopsee".
The main question in my mind is if Steve Jobs stays healthy and troubles-free, because as long as he is running the show, it will continue to prove itself the greatest investing show on earth of the big cap stocks. It's kind of like Sam Walton or Warren Buffett. Each year and decade that they were, or are alive had been chock full of technical analysis pro or con. Yet, the early investors in Wal-mart and Berkshire Hathaway have just the same seen their original modest investments make them mega-rich via stock capital appreciation with minimal capital gains taxation. These guys just have the magic touch, and never let investors down for long for many years running. I think we are talking about the same rarified level of management with aapl, and that is why after six or seven years I am still comfortable staying very long aapl stock for at least another 6 to 12 months or maybe longer. Of course continuing to sell, taking occasional profits near the peaks, and buying more again during the valley- pullbacks is the way to go as usual.
All the rest of the equation will be handily formulated, calculated, and executed with skills approximately equaling those displayed in the past, and the stock will with high probability continue to escalate relative to the market indexes. In my estimation, this will be the continued reality, while we investors try our best to keep up with the details and fill in the secret missing technical data to comfort us that our decision to remain long aapl remains a viable and hugely profitable enterprise.
I maintain my price target of $175 or above by January 2008's end.
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