Let's talk AAPL and the future

It's been a roller coaster ride over the past two years for Apple (AAPL) stock. In December 2007 it hit a then-peak of $199.83 a share. Just two months later AAPL sunk to $125. Three months after that it had recovered to the $180s, but by November 2008, AAPL had plummeted to $82 a share. Since then, the stock has recovered and hit an all-time closing high of $207 on November 17, 2009. As of today it's sitting pretty in the $190s -- though some think the drop from the $200s to $190s is suspicious.

I argue with people all the time why Apple didn't deserve its dips and plummets over the last two years: The company is sitting flush with $23.5 billion $35 billion in the bank, in cash (about the same as the total market value of another major US computer maker, named for its CEO and founder, who 12 years ago famously suggested shutting down Apple and giving the money back to shareholders). It has zero debt. It is one of the most respected companies on the planet and has the world's greatest CEO. But more importantly than the cash and its status, I believe AAPL is a great buy because it has such small market share in all the categories it operates in save one...
iPod classic and iPod nano aside (through which Apple has about 80% share of the MP3 player market), Apple has small to minuscule market shares in computers (10%), phones (2%), and tablets (0%). That's to say nothing of the fact that they are now a player in hand-held gaming of which they possessed zero share a year ago.

What do these small market shares mean? Nearly unlimited room for growth. Given how Apple is dominating the mind share of these new markets already, not to mention its incredible sales, it looks like the next three years of AAPL has very little downside. The only reason AAPL dropped so much over the last two years was because of the recession. It had nothing to do with the company. Apple was and is as healthy as could be. It was the recession – and the understandable fear of investing in the economy at large – that drove the stock down.



Today JPMorgan raised its target on AAPL to $230, and after a look at the latest retail data Piper Jaffray's bullish Gene Munster is maintaining his $277 target. Though I generally don't like financial analysts (I mean, monkeys are at least as helpful as most analysts – and a lot less shady), I think $230 is a easy hit. But more so, I believe that AAPL could hit $300 by the end of 2010 and $400 the year later – as long as the bankers can keep their egos in check and avoid another global meltdown.

But that's just my opinion. What do you think? Vote in the poll and give us your thoughts in the comments!


Disclaimer: This author owns shares in AAPL. Opinions in this post are those of the author only and should not be considered as investment advice.
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