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Cramer Says Apple Shares Should Trade At $300

Cramer Says Apple Shares Should Trade At $300

Apple Inc. (NASDAQ: AAPL) should be valued at $300 per share, but under one condition: the Street needs to stop valuing the company like a "sturdy, cyclical industrial," according to CNBC's Jim Cramer.

What Happened

Apple's stock was trading at $200 per share Wednesday morning. This level values the company at a mere 17 times next year's earnings estimate, Cramer said during his daily "Mad Money" show. Consumer goods stocks such as PepsiCo, Inc. (NASDAQ: PEP) trade at a mid-20 multiple.

If Street analysts were to value Apple with a valuation in-line with consumer goods, shares of the iPhone maker would be worth "well north" of $280 per share, Cramer said. After all, Apple boasts a superior organic growth rate versus "steady-eddie companies" and offers a far better capital return program, he said. Perhaps more importantly, the brand loyalty that consumer goods companies enjoy is "nowhere near that of Apple."

Why It's Important

It's too late for investors to buy Apple as a tech stock, but not too late to buy Apple as a consumer products company, Cramer said. As a consumer products leader, Apple's stock deserves to "trade so much higher," the CNBC host said. 

What's Next

As has been the case over the past few years, Cramer said investors should buy Apple's stock and not trade it.

Related Links:

5 iPhone Suppliers That Could Benefit From Apple's Solid Q3

Rosenblatt: Apple's Q3 Highlighted By Higher iPhone Average Selling Price, Better Gross Margins

Photo by Daniel L. Lu/Wikimedia. 


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