I have been a mega bull on Apple (AAPL) ever since recommending a buy in the stock when it was $131. I rely heavily on rigorously analytical, probability-based algorithms. I was writing about the high probability of Apple stock reaching $1,000 long before Apple began it’s manic run from below $400 earlier this year.
Lately, a race had developed between analysts to see who had the guts to increase their target on Apple to top the other guy’s target. I have previously written that I find this race troubling. A reader may ask, “What is the difference between your $1,000 and other analysts’ $1,001 or $1,650?” (Please see: The Road To $1,650 A Share: How Apple Can Keep Growing)
A large number of recent pronouncements on Apple have been very definitive. ‘Apple will hit $1650’ or ‘Apple will go to $1001’ are examples to illustrate the point. In my book the word ‘will’ connotates a definitiveness that I have never seen occur in the stock market.
In their eagerness to beat their competition with a higher target, sometimes analysts fail to see the forest for the trees. Let us do a qualitative analysis. In other words, to keep the analysis easily understandable, this article will simply approximate the major numbers and ignore the minor numbers.
As an example the $1650 target on Apple is based on 2.5 time sales. Apple has 941,572,000 shares outstanding on a diluted basis. At $1650 per share the market value of the company will be $1.55 trillion. At 2.5 time sales, this means Apple sales will reach $621.44 billion.
Computers, iPhones, and iPads constitute 86.69% of Apple sales…Read more at Forbes
