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Can Apple Beat Priceline To $1,000?

|Includes:Apple Inc. (AAPL), GOOG, ISRG, PCLN

The race is heating up. What race you ask? Well, when Apple (NASDAQ:AAPL) first hit $500 a few months ago, I started a five stock race to $1,000. At the last update, Apple was around $610, and was in third place, trailing high flying Priceline (NASDAQ:PCLN) and stagnant Google (NASDAQ:GOOG). The two other competitors in the race, surgical robot maker Intuitive Surgical (NASDAQ:ISRG) and Mastercard (NYSE:MA), were a little further behind.

Well, we've now been through the heart of earnings season. Intuitive Surgical reported a great quarter, sending shares to nearly $600 before backing off. After Thursday's rally, Intuitive stands at $575, not too far behind Apple and Google. I stand by my prediction that Intuitive will reach $700 sometime in 2013. However, for purposes of this race, I don't think Intuitive can keep up with some of the other powerhouses.

Mastercard hit a 52-week high on Thursday at $445, and my prediction was that the credit card giant would hit $500 this year. It currently is last in the race, but it is putting up a good fight. Since the company is expected to post double digit revenue and earnings growth this year and next, shares still could run from here, but for them to double, it probably will take a bit of time. Mastercard has the least chance of winning this race, but anything is possible.

Now, I'll focus briefly on the third place name. It's Google. No, not Apple anymore after Wednesday. Google is actually behind Apple in the race, although it only is a few cents behind. While Google is showing plenty of revenue and earnings growth, I recently argued that the company is going the wrong way. Why? Well, Google has not been able to improve its margins over the past few years, and the company is trading at a more expensive valuation than Apple, while offering less growth. Also, the company's announcement for a "stock split" left some investors questioning their positions. Google isn't quite splitting, so shares will stay at their high nominal price for some time. I've argued for months that they need a split to get things going, but this wasn't what I was looking for. Google shares are actually down since the start of 2010, while the NASDAQ index is up almost 35%.

Now onto the second place name. After their very good earnings report, Apple jumped nearly $50 to close back at $610. Shares had been under pressure lately after rumors that iPhone sales would be very light, as a couple of the major US phone carriers had reported activation numbers that were well below previous quarter numbers. However, Apple started selling the iPhone 4S in Mainland China during the quarter, which helped to offset the decrease in US iPhone sales. After a week or two of declines which had many fearing Apple's run could be over, Apple cemented its place as the biggest and best company in the market today, and it is likely to trade that way for the indefinite future.

So what does Apple need to do to get to $1,000? Well, if we give Apple an earnings multiple of 15, which I think is fair going forward (for my targets now I am using 14 just for this year and next), Apple would need $66.67 of earnings to reach $1,000. I think that is a little of a stretch for their next fiscal year (ending September 2013), so I would think that Apple could hit $1,000 in the following fiscal year, if their growth continues its upward trend. My guess for $1,000 would be sometime in March to July of 2014.

So that leaves just one company, the current leader in the clubhouse. Like Apple, Priceline had been beaten down lately, falling from a $775 high to just $678 earlier this week. After a nearly $40 rise on Thursday, Priceline is back to just under $725. It leads both Google and Apple by about $115. Given that Priceline has a market cap of just $36 billion, it would seem logical that the company could easily rally by the roughly 33% it needs to hit $1,000. Priceline's market cap is the lowest of the big three, and with revenue and earnings growth for this year and next forecasted at more than 20% each year, it is entirely possible that Priceline could hit $1,000 either late this year or in 2013. Priceline reports its quarterly results on May 9th, and a good result could send the stock above $800.

Apple is back into 2nd place currently, and it is going to give Priceline a run for its money. Everyone loves Apple again, and it seems that new highs in the name are coming soon. However, it is still well behind Priceline in the race to $1,000, and I think Apple's size will make it harder to catch up. The smaller and more nimble Priceline can take a huge step forward next month when it reports its earnings. A great report will shine a huge light on the name, as it will be reporting towards the end of earnings season. With a good report, added attention should push the name to a new high.

Disclosure: I am long TYP.