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Weird-Mart: Tales of the Bizarre from the Walmart AislesApple realized early-on that the corporate market was not going to be its playground as that belongs to HP, Dell and IBM. Apple owns the general education market, the consumer market and the "artistic" engineering market. Although Apple is beginning to make inroads into the corporate/enterprise market, its bread and butter remains the consumer.
In late 2002, Apple changed the landscape of its future with the launch of the iPod. The iTunes store soon followed in 2003 and the stock has been about a ten-bagger since. So, with the stock up 10 fold in 4 years, why is it a table pounding buy today?
Well, here are the 5 reasons why Apple, Inc is a buy today:
- December 2006 quarterly results were stunning. AAPL reported EPS of $1.14 on revenues of $7.1 billion versus expectations of $0.78 EPS on revenues of $6.4 billion. The momentum was enormous across all product segments. EPS for fiscal year September 30, 2007 should be in the $3.20 range and September 2008, early estimates call for $3.85, but look for AAPL to cross over the $4.00 range.
- Apple retail stores sell over $4,000 of merchandise per square foot, making it the number one retailer in America in that very valuable category. The consumer loves shopping at the Apple stores. With over 170 stores in the U.S. and abroad, Apple has room to double its store base, therefore its ultimate franchise value.
- iPod sales were 21 million in the December quarter alone, versus 9 million in December 2005. Can anyone say "mainstream"? The installed base is now at 90 million units, and the iTunes store sold over 1 billion songs in calendar 2006, more than the 11 previous quarters combined!! Amazingly, both the iPod and iTunes markets are still under-penetrated. Room for massive growth with both new buyers and, of course, the typical upgrade cycle.
- Apple's Mac business, cpu market share and general software upgrades are selling through with double digit growth, yet few investors focus on this part of its business. Yet, these business segments carry high margins and plenty of repeat business.
- The iPhone will be huge. Period. With happy iPod users around the world, consumer demand for this offering will be quick and at full price. Music to the accountants' ears.
Georges Yared is the author of "Baby Boomer Investing...Where do we go from here?" and "Stop Losing Money Today". For more info go to http://www.georgesyared.com
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Reader Comments (Page 1 of 1)
2-15-2007 @ 2:30PM
Rick Hanley said...
They are going to indict Steve Jobs. It is virtually impossible for the government not to indict him. No one is above the law. The prosecutors will be deliberate and Jobs' lawyers will be excellent. On the other hand, if they don't touch him, it will reek of special treatment.
With the daily reports of corruption in government and business, they can't afford to get caught up in suspicions of subjective decisions. Not touching Jobs would be subjective overriding objective.
The latest item that arose regarding Pixar just plain begs that he be indicted. Whether the boards of Apple and/or Pixar support Jobs carries no weight. There is no one on those boards who would dare unnecessarily raise the wrath of Steve Jobs. Do you have any idea how tough this guy is? The government, on the other hand, is not intimidated. If they have the evidence they will go for the kill.
2-15-2007 @ 5:54PM
kidrazor said...
For the last time, there's no possible way Steve Jobs benefited from the options backdating, he's done nothing wrong and he's done nothing but brought technology that frees consumers from monopolistic price gouging distribution channels. The music industry got served, our crappy wireless providers are next, can't wait.
2-15-2007 @ 7:04PM
Dennis Kriebel said...
Yo Rick - you really don't have a grasp about stock options! Backdating is leagal - it's how they're handled in the accounting process. Jobs had nothing to do about the accounting end of it. The SEC has already commented that they are not out to get anyone but to clear up questonable practices.
This is just wishful thinking on your part. You need to get over your wrath - Jobs has and will continue to generate alot of wealth for Appple shareholders. This ain't Enron baby!
2-15-2007 @ 8:00PM
gslv said...
My price target is 125 by summer, Then another doubling in a year or two.
I just wonder why Jobs should be such a target when it was others at the company that chose to do this.
2-15-2007 @ 9:06PM
Dean Petti said...
How much doe's it cost per share. I'm interested in doing a little investing. And it sounds like you can't go wrong with apple.
2-17-2007 @ 10:03PM
robindee said...
i own some apple stock and all this positive news is great but i am puzzled as to how an investor makes money without buying and selling constantly! [ i love those dividends!]
2-16-2007 @ 1:56PM
George Linder said...
One big reason not buy AAPL is : not until option probe is resolved. Why? Implications and impact on Steve Jobs, who is AAPL.
2-17-2007 @ 9:33PM
Mr. noitall said...
Georges, it seems like maybe you own Apple stock and you're trying to boost the price with your positive article. That's o.k., but maybe you should hedge your bet alittle by buying some Unilever stock. They make Vaseline, a product that Backdater Steve could be buying alot of in the near future.