plj's  Instablog

Apple (AAPL) stock has had a very nice recovery from the low 80's to the 140 range.  But can it continue the run-up, and how far can it go ?

I believe there are a number of catalysts that will continue to propel the stock higher, including:

• the return of Steve Jobs later this month
• the release of iPhone OS 3.0
• the probable launch of the next generation iPhone in July
• the eventual launch of the iPhone in China (other Seeking Alpha authors quote sources stating this could also be July)
• exciting new applications coming from the app store, such as the Sirius/XM app that will give existing satellite radio listeners an alternative way to listen to this addictive service
• iPhone's growing contributions to future earnings due to Apple's subscription accounting method

I believe most if not all of these catalysts will come to pass.  The buzz level around Apple will only intensify the next two months.  Further, Apple's stock price will continue to benefit if macro forces that are at work moving the overall market higher continue to play out.  At the March 9 lows, Apple closed at 83.11.  On June 2, Apple closed at 139.49, for a gain of 56.38 points, or 67.8% in just 60 trading days.  In that same timeframe, the XLK Technology Sector ETF has moved up 36.4%.  Apple's higher Beta than XLK has caused the Apple stock price to appreciate faster than XLK as expected.

Apple's price peaked just over $200 for five days in late December 2007, as excitement over iPhone / iPod / Mac sales reached a crescendo after the holiday buying period. And though the share price has not touched that level again, Apple's $5.56 in GAP EPS for the last 4 quarters is 41.5% higher than it was at that peak stock price time.  Certainly Apple has performed and exceeded expectations during the 6 quarters since the stock price exceeded $200.  And given that Apple's cash/share has only grown since that time, it is not unreasonable to expect Apple's share price to again approach those peak levels, given the catalysts coming in the next two months.

Disclaimer:  author long AAPL