Here's Why Apple Is Witnessing A Tremendous Rally

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Apple Inc. AAPL is continuing to ride high and breaking market capitalization records. In the last one month alone the company’s shares have increased by over 12%, which though is a good move in itself, but when Apple’s size is taken into account, is actually a whooping move of over $50 billion. However, some people are questioning the high valuation Apple commands, especially when the company is so much dependent on iPhone sales.

 

Brian White, Analyst at Cantor Fitzgerald, was recently on Bloomberg to explain what is driving the stock higher and allows the company to command such high valuations.

 

“I think, there is three factors, one, the market really got it wrong that Apple is not an innovator. Number two, the valuation is still very depressed, 13 times ex-cash, if you look at companies that sell sugar water, they trade at 20 times and grow at 6% a year and number three, we are getting the first new product category since 2010 with the iPad. We call that as supercycyle, when you get a new product category, that’s great for the stock, that’s great for Apple,” Fitzgerald said.

 

When asked about what he thinks about the potential of Apple Watch as a product, Fitzgerald said, “I think it will be huge and if you look at the number of watches sold each year, it’s off the charts, now a lot of these are cheaper watches, but the total number is actually incredible. When I think about the Apple Watch, we use an 18 to 20% conversion rate, you can get about $13 billion in revenue, 60 to 70 cents in EPS. I think it will be the fastest  growing new product category in Apple’s history […]”

 

Shares of Apple were recently trading at $117.94, down 0.58%.

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Posted In: Media
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