Jim Cramer Says Apple (AAPL) Will Skyrocket 50%

Craig Jones
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Posted on 09/15/09 at 7:50pm by Craig Jones

CNBC’s Mad Money Jim Cramer has raised his price target for Apple (NASDAQ: AAPL) to an amazing $264, saying that because of a new accounting standard Apple (AAPL) will increase its earnings per share 40%.

Cramer added that estimates for Apple’s (AAPL) 2010 and 2011 earnings per share will skyrocket 35%-50%. This increase in earnings per share will lower the P/E ratio and investors will, in his opinion, start to think that this stock is cheap. Cramer’s calculation is based on his expectation that Apple’s (AAPL) earnings per share will reach $12 and since its P/E will be raised again to 22, the stock will trade at $264 (12X22).

He explains that when Apple (AAPL) makes a sale it is forced to recognize its sales over two years period. The reason for that is, in Cramer’s words, this accounting standard that discriminates against smart phone makers and forces them to recognize only one eight of each sold phone. He expects that FASB could change this rule in next two weeks and that market will react immediately.

Although the effects from sales can be seen in Apple’s (AAPL) cash flow, he says that money managers don’t look at these numbers as much as they look at earnings per share.

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Apple Computers (AAPL)

by on 09/16/09 8:33am

Great company, and while P/E ratios and accounting practices might affect price, the real driver is consumer sentiment: Simply put, they make great innovative,"sexy" products that are in demand by a young clientele. This is a huge demographic segment, and while PC may remain the most common business machine, Mac share represents the art/graphics/film side of the market- also a growing segment.

Accouting Standards

by on 09/16/09 10:41am

Cramer needs to inform the audience of the source of his "accouting standards" change.

Why? Apple already said it

by iPhoney on 09/17/09 1:20pm

Why? Apple already said it during a conference call.

I do not see the need for a

by Anonymous on 09/18/09 10:01am

I do not see the need for a source. This is national news by this point.

public knowledge

by on 09/16/09 12:32pm

http://www.appleinsider.com/articles/09/09/15/iphone_predicted_to_drive_...

If a stupid search engine

by APPL $500! on 09/17/09 2:31pm

If a stupid search engine that created and manufactured absolutely NOTHING can go to $700, the Apple could easily double.
What we need is to ban all phoney "gambling" trades altogether.
Stocks were made for people to INVEST in companies, not to place bets.

I can't tell you how much

by Anonymous on 09/17/09 9:10pm

I can't tell you how much money I've made on AAPL... by Buying, Shorting, Calling and Putting it. I am definently guilty of it :)

Manufacturing is certainly

by Todd on 09/17/09 10:34pm

Manufacturing is certainly not the only way that economic value and wealth is created. While Google does not manufacture anything, it demonstrated an incredible propensity to generate cash. Apple also demonstrates this ability.

While I agree with you in principle, how do you propose banning the "phoney gambling" trades?

Also, the accounting standard that Cramer is speaking of has no effect on the cash flows of the company. I think the market is smarter than Cramer supposes, and that following the change in standard, AAPL will simply trade at a lower P/E.

The business versus "artsy"

by Zeke on 09/17/09 3:02pm

The business versus "artsy" market differentiation between Microsoft and Apple is a very old argument, and it's never been accurate. Consumers are choosing Apple because they can. Business is choosing (for a while yet) Microsoft because the end user, who suffers with the results daily, has no choice in the matter. The company buys what the accountants tell it to. Never mind that it's inferior, slow, frustrating, and in the long run, more expensive. If it doesn't show up on an accounting spreadsheet in dollars then it doesn't count.

People are sick to death of fiddling with their computers every day to make them work. They're tired of downloading drivers and fixing registries. There was a time when that part of the experience was new and fun, but it's drudgery now. Apple eliminates all of that. It just works.

Man when it hit bottom at $64

by Anonymous on 09/17/09 10:16pm

Man when it hit bottom at $64 a share I said its time to buy

I'm laughing all the way to the bank

Who says we have to work hard for the money?

Yeah right ... when the

by Anonymous on 10/01/09 4:02pm

Yeah right ... when the consumers are broke, nobody will be rushing out the door to get the next iphone or mac-Pro. $264 and P/E of 22, okay ... so what happens when top line get squeeze? Cramer need to say what he was told to say. IMO we are approaching the distribution stage, they need to dump the stocks on retail investors.
If Cramer has any moral, he would be telling people to buy when SP500 was trading below 700, not now.

Yeah right ... when the

by Anonymous on 10/01/09 4:04pm

Yeah right ... when the consumers are broke, nobody will be rushing out the door to get the next iphone or mac-Pro. $264 and P/E of 22, okay ... so what happens when top line get squeeze? Cramer need to say what he was told to say. IMO we are approaching the distribution stage, they need to dump the stocks on retail investors.
If Cramer has any moral, he would be telling people to buy when SP500 was trading below 700, not now.

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