Most of us assume that Apple (NASDAQ:AAPL) stock has been the darling of Wall Street on its big run over the last few years. The truth is just the opposite. Apple stock growth is doing a poor job of tracking the actual growth of the company. Such a disconnect creates a buying opportunity on this widely followed but severely misunderstood stock.
Two years ago Apple stock was trading at $187.62. Today the stock trades 34% higher at $252. Which segments of Apple have outgrown the 34%? Consider the following comparisons from the 2008 March quarter with the 2010 March quarter:
- Revenue growth: 80%
- Net Income growth: 192%
- iPhone growth: 415%
- Cash growth: 115%
- iPod Touch growth: 63% YOY
- Chinese revenue growth: over 200% YOY
- iPad didn’t exist
- iAd didn’t exist
The conclusion is that Apple stock will accelerate into each quarterly earnings release as it tries to keep pace with the company. Not only do Apple’s competitors struggle to keep up with Steve Jobs, but Apple stock can’t keep up either.
My forecast is that investors will make up the difference more quickly than the competition. The P will be racing to keep up with the E in the P/E ratio. The most amazing thing about Apple is that its growth is still accelerating. The next 18 months of earnings look primed to propel Apple to become the largest market cap stock in the world.
Disclosure: Author long AAPL