Apple’s stock does not know when to stop climbing. Analysts are sure just to give up scribbling new numbers all the time. The consensus was that Apple would topple even a little in a post iPad throng. Despite expectations that the tech gargantuan would hit its head on the ceiling, his head burst right through and he is still standing taller everyday. There seems to be no end, even at share prices of $560.
Stocks are up 5% right from the debut of the new iPad by Tim Cook, Apple CEO, last week. Just since Valentine’s Day Apple stock has risen 10%, from $500 per share. To date this year Apple is at a 38% increase, which is not something to wag your finger at.
In sharp contradiction are analysts’ sentiments and predictions. Peter Misek, analyst for Jeffries & Co., raised his price target this week to as high as $699. Goldman Sachs’ Bill Shope pushed his up to $660 last week. Following suit were Ben Reitzes of Barclays Capital at $710 and Shebly Seyrafi at FBN Securities at $730.
Since this is going wild, investors are likewise feeling the frenzy. The buzz is that Apple stocks will surpass consensus by a huge margin. Likewise, Apple’s increase in profit projections are currently well ahead of its stock prices, spelling good weather ahead. Consensus earnings targets have been no problem for Apple either, save the fiscal fourth quarter 2011 slight stumble. Apple overshoots it by at least 12% each time. There is no wonder sentiments are riding so high in light of this kind of performance.
Let us hope investors do not start living a pipe dream, though, and overestimate iPad sales, so that stock can still perform well. After all, thirteen times the earnings estimates of 2012 is pretty nice for a high growth stock, no matter what you might think of Apple itself.
One look at the competition and you will agree that it has gone limp. Research in Motion (RIMM) has not gone anywhere with the PlayBook. Android tablets have been battering at the door, but to no avail. Consider Xoom from Motorola (MMI), a company which is being absorbed by Google (GOOG), and Samsung’s Galaxy.
There is really no worthy challenger on the horizon and the cravings for gadgets will not subside either. They have become so integrated into our lives now. Can you imagine life without your cell phone? Neither can most cellphone users imagine life without their iPhone. Point made!
Kindle Fire from Amazon (AMZN), only fare well due to its no-nonsense attitude and low price points, but it is no match in style compared with the iPad. It really is in a different category.
Apple has not created some illusory bubble, like with the tech crash of 2000. Tangible goods are being produced and sold and oodles of money are being raked in. We are not talking Facebook valued at $100 billion with no tangible goods whatsoever. There is no hocus pocus going on with Apple. They are not selling empty tech buzz words.
Credit must be given for a company that is doing what a company should do, create real value for the customer and earning money. When push comes to shove, Apple is riding high because they are just doing it right, while other companies still have yet to figure out that it is simple, old-fashioned hard work and real business that matters. There are no gimmicks or shortcuts.