Apple is up against the law of large numbers, writes Sacconaghi, as “If the company grew at the same
pace it did over the last five years for the next five years, its revenues would be $1.2 trillion (yes, trillion),
or nearly the size of Australia’s GDP.” I do think that this concept weighs on the stock price. But, I also think I will be able to sell my Apple shares above $800.
The concept can be looked at from different directions. First, Apple still has plenty of room to grown in their major areas of activity. And, there is no doubt that they will continue to come up with entirely new categories (HDTV, Smartwatch, etc.). So, it almost seems impossible for the E of the P/E NOT to grow. The P/E is already low at 12. Either the stock price HAS to go up or the P/E gets to some crazy low numbers.
Another way to look at Apple is to break out the revenue categories and evaluate them as separate businesses and assign a valuation. Then, you add a new category and that has to be added as well.
It will definitely be more and more of a tug of war between the market cap the P/E in the future. |
