Showing posts with label Long AAPL. Show all posts
Showing posts with label Long AAPL. Show all posts

Friday, March 2, 2012

Apple should be $600 / share

Apple is a steamroller. Unstoppable. It should be trading at $600/share right now. Plus the Ipad 3 is coming out and the author sees Ipads becoming an executive "must have".

The author has entered the following position.

Buy Apple Oct $555 Call $47.65
Sell Apple Oct $560 Call $45.30

Let me show you what has made me go crazy about Apple.

Here is the deal, all last year it was making $6B a quarter for a total of $27B revenue (average) / $6B in earnings growing at 40% rate.

Then came the new Iphone 4S last quarter, and then in one quarter it went to $46B revenue / $13B in earnings in one quarter. That blew the hinges off of any previous valuation. Assuming no growth and continued earnings they will make $52B in earnings this year and thus with a $470B market cap sell at less than 10 X earnings. Now think of the fact that they have $80B in cash on the balance sheet and they are selling at 8 X earnings.

If we get into normal valuations of 20 X earnings against 40% growth this is a $1T stock.

All this and the iPhone is still limited to 10% of the population in China because they have only one carrier, like the AT&T deal from two years ago.

This said, the stock has run really far really fast and should plateau for a bit. But it is going up from here.