The Run has Just Begun

Stock (Symbol) Stock Price

Apple (AAPL)


Data is as of Expected to Report Sector

May 2, 2012

July 16


Sharek’s Take
David SharekDon’t think for a minute Apple is high after run from $400 to $600. The run has just begun. At 12 times earnings this stock is obsurdly cheap. Right now the stock is just digesting it’s gains. I’m going to use this as an opportunity to buy more shares. AAPL is currently my largest holding — accounting for 26% of all portfolios as of last quarter — yet I still need more.

Last quarter was rock solid. iPhone sales rose 88% and iPad sales jumped 151%. Up next is Apple’s TV, which should hit the shelves next year. This company is on fire. iPhone sales were 58% of revenue last quarter, iPad sales were 17%. Expect the iPad share to increase. Profit margin rose to 47% last quarter, from 41% a year ago.

One-Year Chart
Here’s why AAPL isn’t expensive: Last quarter the P/E was 11; this quarter the P/E is 12.

Look at the Annual EPS Growth on the right side of the chart. Profit growth is humming right along. I think the company will double profits next quarter.

Earnings Table
Profits jumped 92% last quarter on a 59% increase in sales. Wow.

For the second consecutive quarter AAPL annihilated analyst estimates. The company made $12.30, blowing past the $7.82 estimate. This number had been $5.02 four quarters ago.

Annual Profit Estimates are flying higher. The 2014 estimate jumped by $10 a share. The company is expected to earn $162 in profits between 2012 and 2014.

Estimates look amazing the next two quarters — and these numbers keep increasing. 3QtrsOutEst and 4QtrsOutEst need time to bake. 

Fair Value
AAPL is still way below its Fair Value. My new Fair Value for 2013 is $1888 a share.
Ten-Year Chart
AAPL is on a parabolic move higher. I think this stock can continue to escalate because its P/E is only 12. Plus, the stock growth of 48% a year isn’t as much as the profit growth of 75% a year — AAPL has some catching up to do.
Power Ranking Bottom Line
Growth Portfolio

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Apple continues to be one of the best investments of our generation. I see the stock tripling from here. Eventually Apple could make $100 in profits in a year (2016?) and a P/E of 25 would give the stock a price of $2500.

AAPL is obviously ranked #1 in the 18 stock Growth Portfolio and 8 stock Aggressive Growth Portfolio Power Rankings. I’ll say it again: This is the best investment in my lifetime.

Aggressive Growth Portfolio

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