Apple's (AAPL) earnings per share nearly doubled to $6.40 in the last quarter, and revenue rose 83% to $24.7 billion -- and the figures for Apple's previous quarter were almost as good. But Apple's shares are only up 11% in the last six months, a growth rate that trails the Nasdaq's 13% rise over the period. Even the stock of also-ran smartphone maker Research In Motion (RIMM) is up by about the same percentage as Apple's over that time frame.
But things may be about to change. Apple's stock may even hit $500 by the end of this year, which would be a 42% improvement. Here are a few reasons why:
• One of the most amazing things about Apple is that demand for its products doesn't appear to be falling at all. COO Tim Cook and CFO Peter Oppenheimer said demand for the iPad 2 was so great that the company was selling every unit it made and would like to improve its manufacturing capacity. They made similar comments about the iPhone 4.
• Apple says that parts supplies from Japan are not a serious issue. Investors were concerned that shortages after the earthquake and tsunami could hold back manufacturing capacity.
• iPhone sales in China rose by 250% last quarter. Some analysts expect that rate of growth to rise in the quarters ahead. China is by far the world's largest market for handsets, and 3G capacity in the People's Republic is growing quickly.
• Mac sales are growing by double-digit percentages, and units sold hit 3.8 million last quarter. Sales of most PCs have tapered off in the last quarter, but the Mac continues to pick up market share despite its relatively high price.
• Apple is close to becoming the largest tech firm in the U.S. with a revenue run rate of $100 billion and profit run rate of $36 billion. That would make Apple as large as Hewlett Packard (HPQ) and IBM (IBM). The difference is that Apple's growth rate is above 75%, while the growth rates of HP and IBM are in the 10% range. Apple's relatively narrow range of products is doing better than the broader offerings of the other two companies.
• Apple is likely to bring out the iPhone 5 in the fall, and the iPad 3 may not be far behind it. Each time Apple launches a major product upgrade, sales surge.
• And finally, Apple hasn't even introduced any 4G capable products yet. That market is increasing rapidly as the sales of the HTC Thunder Bolt show. In some Verizon stores, the Android-based smartphone outsells the iPhone 4. Verizon (VZ), AT&T (T) and Sprint (S) have only begun to aggressively market 4G in the last few months. Apple is likely to enter the market in the next year.
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