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The Levee Has to Break

Stock (Symbol) Stock Price

Apple (AAPL)

$353

Data is as of Expected to Report Sector

April 29, 2011

Jul 20

Technology

Sharek’s Take
David SharekApple’s clicking on all cylanders, setting records for large company growth rates. Last quarter, iPhone sales jumped 113% from the year-ago period.  The old Mac grew sales 28%. iPad year-over-year sales growth? There’s no answer — the iPad debuted in April 2010. It wasn’t even around a in Q1 2010. The company did sell 4.69 million iPads last quarter. Yes, that’s million. It sold out of the iPad 2 last quarter — Apple can sell as many iPads as it can make. It also sold 19 million iPhones and 9 million iPods. Looking ahead, Steve Jobs says iPads will take half the mobile-ad spending in the second half of 2010.
 
The numbers are so fantastic that this stock should be shottign higher every month. Instead its basing — as the momentum builds. Its like pressure is being put on the damn — with water levels rising. At some point the levee will break and the stock will burst higher.
One-Year Chart
The one-year chart shows AAPL building a nice base. With the ultra-low 14 P/E and 92% profit growth last quarter, this could be a chart we look back on years from now and say “this is when the run started”.
Earnings Table
Apple’s profits almost doubles and revenue growth in the last six quarters has been 32%, 49%, 61%, 67%, 71% and now 82%. Business is accelerating — why isn’t this headline news?
 
AAPL has been — and continues to — crush crushed estimates.Last quarter the company beat by 113 cents — a hundred thirteen cents! If AAPL beats by a dolalr next quarter profit growth will be 88%.
 
Annual Estimates continue to increase. Its as if we are making up figures here.
 
Quarterly estimates popped, and show solid growth for the next two quarters. Three and four quarters out growth is expected in the 20s, but AAPL alsways beats the street.

 

Fair Value
This Fair Value chart shows emense upside for AAPL stock. When the levee does break this stock should be pushing past $500, $600, even $700 very quickly. 25 times next year’s estimate is $700.  
Ten-Year Chart
Apple’s ten-year is beautiful. When the market crashed in 2008, AAPL management said things were slowing down. They were a little-too bearish as the company popped out 17% profit growth in 2009.
 
Profits were $6 in 2009, $15 in 2010 and now estimates of $24 this year — wow.
Power Ranking Bottom Line
Growth Portfolio

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Apple is the best investment you can make in a stock. This is the easiest money-making idea of all-time.
 
AAPL is thetop stock in the 20 stock Growth Portfolio and the 10 stock Aggressive Growth Portfolio. The 14 P/E and 92% profit growth is even better than the awseome 16 P/E and 75% profit growth a quarter ago. There’s so much pressure building that when AAPL breaks out it could take off like a gusher.
Aggressive Growth Portfolio

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