Apple Stock Update, Fall 2008 by the Rich Sage

As you may have followed, I have been long on Apple for a while. When the recent 45% correction took place, I “loaded up” on mostly options that expire in Jan. 2009.  The idea that a company that grew nearly 100% (Earnings per share growth) and had almost $25 Billion dollars in the bank (with NO debt) and selling it’s shares around 4 times earnings was –well, unsustainable –in a very good way.  I think the current stock growth will result in AAPL reaching $220 per share, which is what I predicted earlier in the year.

IF you would like to see a detailed analysis of Apple’s stock value, I’ll point you to this article by the folks at Apple Insider.

Apple is HOT Because:

• Their products are great –easy to use.  The world is learning about them.
• In these hard times, their products still offer a good value.  IF you save up to buy something, wouldn’t you buy the best?

What Apple will do in 2009…

In their first stage of post Steve Jobs progress and growth was led by the iPod.  Then came further growth in software and the Mac computers.  Now a third stage of growth is led by the iPhone and iPod Touch.  I consider the iPhone and iPod Touch the cheapest hand held computers one can own.

I feel the third stage of growth will lead to stock to around $300 per share eventually –perhaps, late 2009.  BUT, that is not what I need.  I need the stock to reach my $220 target.  Then I’ll move on to other companies that offer great products and are market leaders in what they do.

My Apple Wish List?  Just one — I don’t use a cell phone much at all.  I would like to see a tablet size iPod Touch –perhaps, about twice the size of the current model, so that I can use it as mostly a laptop replacement.  It will also work great for reading ebooks, used as a remote control, accessing the Internet and various other tasks that can be accommodated by a point and touch user interface.  I really need one! B>)

This is the ‘game-plan’ I see going forward –using what has worked for Apple in the past years, and making it better, adding more and more value.  I don’t see brand new types of product lines, but more of the old one made new with more functions and sizes.

That’s why I made a claim for a larger iPod Touch.  Just like the original iPods which now come in so many sizes, so will the iPod Touch allowing users to much more with it.

Making an iPod Touch Larger Allows:

• Longer battery life
• Larger screen
• Perhaps, allows us with large hands to type directly to a screen based key board, that’s larger than the current one.
• With a solid state drive it might be able to hold much more data
• And lastly, a port to attach USB devices

Rounding out with this type of product line will lead to masses of users who first jumped on to Apple with the iPods.  Another legion of users will come on board with the iPhone.  When it comes time to have something that is between a cell phone and laptop, many of them will elect to get an iPod Touch with a larger screen to accommodate nearly all of their online computing tasks.  I believe such an user base will reach around 200 million.

The iPhone has already sold over 10 million and it will reach my estimate of 15 million sales by the end of the year.  But that’s just a start –in 2009, the combined iPhone, iPod Touch and what I believe is a larger model of the iPod Toch line will reach 60 to 80 million unit sales! Outstanding sales, incredible products and the current momentum will lead to great Investor returns!

Carpe Diem,
Rich Sage