Apple (NYSE: AAPL) just keeps on chugging. In the midst of co-founder Steve Wozniak recently predicting an eventual $1000 share price ( http://www.cnbc.com/id/46586012), the stock has hit an all-time high in this weeks markets in the $544 range. Yet it is still undervalued. Projecting growth even with an modest EPS estimate of 50, accounting for a P/E ratio of 15, we get a projected share price of around ~$750.00 – and that’s without factoring in any new innovations or devices. Speaking of, let’s take a look at what is coming up from Apple in this year alone:
-The recent predicted press release of the iPad 3 on March 7th (Quad-core processor, 4G LTE connectivity, retina display)
-A rumored price drop (into the $349-399 range) for a new 8GB iPad 2 (http://www.digitimes.com/news/a20120229PD215.html)
-A rumored 7.85inch iPad in the $249-299 range to compete with the Kindle (http://www.digitimes.com/news/a20120229PD220.html)
-Apple TV launch in Q3-Q4 2012
Now let’s think about China, the world’s fastest growing economy. What have you heard about Apple (the worlds largest by market cap, and one of the world’s fastest growing and most profitable companies) in the same sentence with China? I’m willing to bet very little compared to other Apple news. Let’s examine.
The reality is that Apple has barely tapped the Chinese market, which could be it’s most profitable by far. True, Apple has only 5 stores in China, but with China just now breaking the 1 billion mark on mobile phone subscriptions, it would be foolish not to follow through on it’s 2011 plan of 25 stores on the mainland. With Apple’s own claims that the Chinese stores are the most profitable per square foot than any other in the world, as well as the fierce brand loyalty which encompasses the Chinese culture, Apple really needs to step up it’s distribution and consumer supply strategies before Android squeezes them out of the market.
One of the biggest common criticisms of Steve Job’s command of Apple was that he was always too focused on the United States. Regardless, Apple will only get stronger. The business model that Apple employs is precipitous to continued growth because of the inherent infrastructure in Apple devices. Everything Apple does contributes to and evolves in one giant sphere of products and interactions. It really is quite brilliant. It makes logical sense that the higher Apple’s stock climbs, the more bearish investors will be, but bottom line is that 1k/share could be a serious reality by Q1-Q2 next year depending on how well China grabs and holds on to Apple – or I should say, how well Apple takes advantage of the wealth of opportunity in China. a
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.