Apple stock at $500 a share. And climbing?

Apple stock hit the $500 mark on Monday. By common valuation standards, Apple stock should be much higher.

|
Aly Song/Reuters/File
People attend the inauguration of the new Apple store in downtown Shanghai in this September file photo. Skeptics of Apple stock, which hit $500 a share Monday, wonder whether this corporate juggernaut can maintain its phenomenal momentum. Apple supporters have a one-word answer: Asia, where the iconic maker of the iPhone, iPad, and iPod has barely scratched the surface.

Apple's stock broke above $500 for the first time Monday. It was the latest step in a rally that began more than two weeks ago, when the company reported staggering sales and profits for the holiday quarter.

The shares hit $503.83 soon after opening, before subsiding to $502.60 in after-hours trading. That was up $9.18, or 1.9 percent, from Friday's close.

Apple Inc. and Exxon Mobil Corp. have been vying for the position as most valuable company in the world since last summer, but the latest rally has made the gadget maker 17 percent more valuable than the oil company. Its market capitalization is now $465 billion, compared to Exxon's $400 billion.

On Jan. 24, Apple posted net income of $13.06 billion for the quarter that ended in December, more than doubling its profits from the year before. Sales were $46.3 billion, up 73 percent from a year ago.

Even before it posted blow-out results, Wall Street analysts had pointed to a big gap between Apple's share price and its earnings. By common methods of valuation that compare a stock price to earnings and earnings growth, the stock should be worth much more.

The average target price of Apple shares given by 37 analysts who have updated their ratings since the Jan. 24 report is $588, according to FactSet data.

Analysts say the company's policy of keeping its cash rather than paying a dividend has been hurting the stock. Value-oriented funds are often forbidden from investing in companies that don't pay a dividend, and growth-focused funds are often tapped out — they're heavily invested in Apple already, and likely don't want to increase their holdings.

However, company watchers expect Apple to start paying a dividend this year. On a conference call after the earnings report, chief financial officer Peter Oppenheimer said the board was in "active" discussions about the company's use of cash.

Apple looks set to launch sequels in its hit iPhone and iPad franchises this year. There's also speculation that it will move into the TV market.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Apple stock at $500 a share. And climbing?
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2012/0214/Apple-stock-at-500-a-share.-And-climbing
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe