Why Apple Inc. Will Hit $200 per Share in 2007 14 comments
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I bought Apple on February 20, 2004 for a split-adjusted $11.19. I still own it. Today, at over $90, I consider the stock a screaming buy. Why?
The iPod continues to sell at year-over-year growth rates of over 50%. We expect 60 million iPods to be sold in 2007. The MacTel computers are experiencing accelerating demand with January 2007 sales over 100% higher than sales in January of 2006. We expect 12 million MacTel computers to be sold this year. The iTunes Music Store is an enabling technology that delivers ease of use across multiple hardware platforms. The Apple Stores have over $4,000 in sales per square foot, the most successful retailer in the world, by that critical metric. The Apple stores enable the success of the iPod and MacTel. Things will only get better when we add OS X Leopard, Apple TV and iPhone to the product line this year. We dare not guess what these sales will be. But, we believe they will be huge. We see a melt-up coming in 2007, regardless of general market conditions.
This is our creed: Stock prices are made by earnings growth and public expectations. We believe that earnings growth predicts the direction and magnitude of a stock price movement. In the case of Apple, when the iPod’s 50% growth rate is combined with the 100% growth rate in the MacTel computers, you have enough positives to nearly double Apple’s earnings. With the iPhone, Apple TV and OS X Leopard, the expectations for Apple near future have never been higher. This combination will drive the stock price to $200 this year.
The iPod was 3% of Apple's sales in January of 2004, according to statements made in the quarterly earnings call. I bought Apple in February of 2004. The iPod was dismissed as irrelevant by most of the analysts on that call. We knew better. I remember how the "Walkman" transformed Sony in the eighties. In 2004, I saw the iPod as the new "Walkman." Now "music", which is an Apple product category that includes the iPod, is over 40% of Apple's revenue. The right product can transform a company. We tend to know this before others. Apple is being transformed by the iPod, MacTel computers, and we expect the iPhone will be massively, immediately positive as well. I truly believe that Apple will be the first company to achieve a market cap of one trillion dollars. That 12:1 from today's valuation. And, I believe that this will occur in the next five years.
Focus your assets on Apple Inc. and expect a great year.
Disclosure: Author is long AAPL
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This article has 14 comments:
But $200 a share!
I give Apple until “08 for that.
Apple cannot do it by itself- we also need a good economy.
Sunbug
The PowerPC lives on in some IBM servers, and on the low-margin end, in Xbox, PS3's and Wii's. In these units, the graphics boards rather the CPU's do the heavy lifting, so the neglect of the PowerPC architecture doesn't matter as much as it does in a general-purpose computer.
When the Mac moved to Intel, Macs acquired the nickname "MacTels", referring to the Intel chip, which, incidently, carries the fringe-benefit that the chip switch to Intel allows Macs now to run Windows software full-speed with some added software (Parallels or Boot Camp), if you need a Windows application you can't get on Mac (and there are a couple of interest). You end up, effectively, with two computers for the price of one.
MacTel refers to the Intel-based Macintosh computers. Good fortune to you.
Steve
Adding the market capitalization of NOK, TMW, HPQ, DELL & MSFT you don't get a trillion dollars. His reasoning is wishful thinking.
Apple moved 1.6 million units during their best quarter last year. To hit 12 million this year, they'd need to do double their best 2006 quarter every quarter in 2007.
During the Jan quarter of 2006, Apple only moved 1.1 million MacTel units. So it's not hard to imagine easily doubling Jan 2006's numbers. But annualized that's still a far cry from 12 million.
Apple needs to introduce quite a few products between now and 12 million units/year. I'd be thrilled if we got them all real soon now. But realistically it's probably 2009 before Apple has a viable shot at that number (unless we count Apple TVs and iPhones as Mac units).
reinharden
path and Steve has spend 10 years the same to spread seeds all over. Apple is set to take it on with all of these segments because all Apple products offers the perfect mix of advanced technology, fair price and great image values for any of its products. Sony gave us the Walkman and took the profit to get control over media companies who keep squeezing every cent between artists and consumers.
Apple brought us the iPod and uses the profit to make even cooler stuff! With all that innovation and user-friendliness, Apple deserves to beat the market value of the previously ever biggest player, which puts my personal speculative dream like target to something above 400 billion or 360 - 400/share.
- if the USD looses another 30% of value over the next few years, from a Euro point of view, a Trillion is just worth 700 Billion. equally, 500 Billion would be 350 Billion worth of "real money". haha.
-The markets may continue to hype as the cheap dollar attracts still more funds > tolerance on P/E ratios
-Every recent decade brough out some new super-company to beat all previous values in their field. In all those years, Apple was creative and stubborn enough to push the development of new electronic standards and devices again and again. Companies like Motorola, Nokia selling their phones a fraction of the profit's Apple. If all goes mad and Apple can sell 50 Million Phones @ 100$ profit, thats 5 Billion and may add 82.5 USD - just for the iPhone, at a P/E 30, to the stockprice.
- Most people who use one Apple product want to get another. Because they're all equally cool and user friendly
- Apple has way to go on the international market, especially with the iPhone. iPhone should bring iTunes distribution to many more markets and attract more notebook buyers
- Every iPhone is an advertisement for an Apple Computer and iPod and AppleTV
- There's a point soon at which something has to be done with all that money earned, a lot of future value could be come from there.
FOR IMMEDIATE RELEASE
Thursday, November 01, 2007
Contact: Carrie Bebermeyer, (573) 526-0949
Contact: Ryan Hobart, (573) 526-4734
Carnahan Cracks Chicken Little Case Wide Open
Jefferson City, Missouri — Missouri Secretary of State Robin Carnahan’s Commissioner of Securities, Matt Kitzi, issued two enforcement orders late last week against Stephen M. Coleman of St. Louis and his investment adviser firms for fraud and unsuitable recommendations related to a mutual fund and an investment group he controlled.
In the first order, Coleman was ordered to stop the unlawful sale of securities tainted by untrue statements, material omissions and schemes to defraud. It is alleged that Coleman sold investments in one of his companies, Chicken Little Fund Group, to clients of his investment adviser firm, Daedalus Capital, LLC, without disclosing his potential conflicts.
The second order seeks revocation of the investment adviser licenses for Coleman and both companies.
Coleman created the Chicken Little Fund Group for the purpose of forming mutual funds, and the first fund he formed was called the Chicken Little Growth Fund. The cease and desist order states that, as the fund’s investment advisers, Coleman and Daedalus Capital were to receive hundreds of thousands of dollars in fees and commissions, but were also required to cover certain fund expenses.
The majority of the money invested in the Chicken Little Fund Group allegedly went to pay for Stephen Coleman's salary, a financial plan for he and his wife and a $100,000 personal tax lien, leaving little money to pay the expenses of the mutual fund. After approximately two years of existence, the fund was shut down when Coleman was unable to pay expenses. The orders assert that Coleman never told his client investors that their funds would be used for his personal purposes and failed to disclose to investors that two prior lawsuits had been filed against him for breach of contract.
“Many investors hear stories about the big money to be made in hedge funds or private equity funds, and they want to be a part of that action,” said Carnahan. “But investors must be careful, and should always check out the merits, costs and fees associated with an investment, as well as the background of the people who are offering it.”
This is not nice Mr. Coleman:
www.sos.mo.gov/news.as...
"The Securities Division is seeking almost $200,000 in civil penalties and costs, and the revocation of all three respondents’ securities licenses. Coleman and his companies have thirty days to request a hearing on the fraud charges and civil penalties.
For more information regarding investments and fraud protection, visit the Secretary of State's online Missouri Investor Protection Center at MissouriSafeSavings.co... or call the toll free investor hotline at 1-800-721-7996."
FOR IMMEDIATE RELEASE
Thursday, November 01, 2007
Contact: Carrie Bebermeyer, (573) 526-0949
Contact: Ryan Hobart, (573) 526-4734
Carnahan Cracks Chicken Little Case Wide Open
Jefferson City, Missouri — Missouri Secretary of State Robin Carnahan’s Commissioner of Securities, Matt Kitzi, issued two enforcement orders late last week against Stephen M. Coleman of St. Louis and his investment adviser firms for fraud and unsuitable recommendations related to a mutual fund and an investment group he controlled.
In the first order, Coleman was ordered to stop the unlawful sale of securities tainted by untrue statements, material omissions and schemes to defraud. It is alleged that Coleman sold investments in one of his companies, Chicken Little Fund Group, to clients of his investment adviser firm, Daedalus Capital, LLC, without disclosing his potential conflicts.
The second order seeks revocation of the investment adviser licenses for Coleman and both companies.
Coleman created the Chicken Little Fund Group for the purpose of forming mutual funds, and the first fund he formed was called the Chicken Little Growth Fund. The cease and desist order states that, as the fund’s investment advisers, Coleman and Daedalus Capital were to receive hundreds of thousands of dollars in fees and commissions, but were also required to cover certain fund expenses.
The majority of the money invested in the Chicken Little Fund Group allegedly went to pay for Stephen Coleman's salary, a financial plan for he and his wife and a $100,000 personal tax lien, leaving little money to pay the expenses of the mutual fund. After approximately two years of existence, the fund was shut down when Coleman was unable to pay expenses. The orders assert that Coleman never told his client investors that their funds would be used for his personal purposes and failed to disclose to investors that two prior lawsuits had been filed against him for breach of contract.
“Many investors hear stories about the big money to be made in hedge funds or private equity funds, and they want to be a part of that action,” said Carnahan. “But investors must be careful, and should always check out the merits, costs and fees associated with an investment, as well as the background of the people who are offering it.”
This is not nice Mr. Coleman:
www.sos.mo.gov/news.as...
"The Securities Division is seeking almost $200,000 in civil penalties and costs, and the revocation of all three respondents’ securities licenses. Coleman and his companies have thirty days to request a hearing on the fraud charges and civil penalties.
For more information regarding investments and fraud protection, visit the Secretary of State's online Missouri Investor Protection Center at MissouriSafeSavings.co... or call the toll free investor hotline at 1-800-721-7996."
www.sos.mo.gov/news.as...
"News Releases
FOR IMMEDIATE RELEASE
Thursday, November 01, 2007
Contact: Carrie Bebermeyer, (573) 526-0949
Contact: Ryan Hobart, (573) 526-4734
Carnahan Cracks Chicken Little Case Wide Open
Jefferson City, Missouri — Missouri Secretary of State Robin Carnahan’s Commissioner of Securities, Matt Kitzi, issued two enforcement orders late last week against Stephen M. Coleman of St. Louis and his investment adviser firms for fraud and unsuitable recommendations related to a mutual fund and an investment group he controlled.
In the first order, Coleman was ordered to stop the unlawful sale of securities tainted by untrue statements, material omissions and schemes to defraud. It is alleged that Coleman sold investments in one of his companies, Chicken Little Fund Group, to clients of his investment adviser firm, Daedalus Capital, LLC, without disclosing his potential conflicts.
The second order seeks revocation of the investment adviser licenses for Coleman and both companies.
Coleman created the Chicken Little Fund Group for the purpose of forming mutual funds, and the first fund he formed was called the Chicken Little Growth Fund. The cease and desist order states that, as the fund’s investment advisers, Coleman and Daedalus Capital were to receive hundreds of thousands of dollars in fees and commissions, but were also required to cover certain fund expenses.
The majority of the money invested in the Chicken Little Fund Group allegedly went to pay for Stephen Coleman's salary, a financial plan for he and his wife and a $100,000 personal tax lien, leaving little money to pay the expenses of the mutual fund. After approximately two years of existence, the fund was shut down when Coleman was unable to pay expenses. The orders assert that Coleman never told his client investors that their funds would be used for his personal purposes and failed to disclose to investors that two prior lawsuits had been filed against him for breach of contract.
“Many investors hear stories about the big money to be made in hedge funds or private equity funds, and they want to be a part of that action,” said Carnahan. “But investors must be careful, and should always check out the merits, costs and fees associated with an investment, as well as the background of the people who are offering it.”
The Securities Division is seeking almost $200,000 in civil penalties and costs, and the revocation of all three respondents’ securities licenses. Coleman and his companies have thirty days to request a hearing on the fraud charges and civil penalties.
For more information regarding investments and fraud protection, visit the Secretary of State's online Missouri Investor Protection Center at MissouriSafeSavings.co... or call the toll free investor hotline at 1-800-721-7996."