THE APPLE INVESTOR: The Stock Is On Fire And The Company Is The Sun

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Sun Fire Ball

AAPL Is On Fire, Hitting New Highs
After the monster quarter, Apple shares continue to rise, up about $4 to $270 or 18x estimated fiscal-year 2010 EPS and 12x Enterprise Value / Trailing Twelve Months Free Cash Flow. At this rate, analysts will soon have to start hastily revising their $300 targets again. Upcoming catalysts include monthly NPD data (Mac / iPod business), the domestic 3G iPad launch date (April 30); international release of the iPad (May 10); and the launch of the next generation iPhone (this summer) as well as the CDMA / Verizon version (rumoured to be ready in time for the holidays).

Apple Is The Sun And Developers Flock To Revolve Around It
(BusinessWeek)
After several generations of the iPhone and the recently launched iPad, Apple has more than 125,000 developers creating apps for its devices. This is not unlike the Wintel-like cycle that Microsoft has enjoyed; new Apple devices drive the creation and purchase of new apps and the cycle continues. “Except it’s better than Wintel; the combination of Intel processor running Microsoft’s Windows operating system never really managed to leap from PCs to other devices.” The growth of the company depends just as much on managing its collaborators as it does on beating its competitors–and it’s doing great here.

rumours of Apple Acquisition of ARM Holdings Are Ridiculous (Business Insider)
London’s financial markets were abuzz with gossip that Apple might acquire ARM Holdings, a processor licensing company. Given the $40 billion in cash the company has amassed, investors are looking for Apple to put the money to good use. Business Insider’s Pascal-Emmanuel Gobry doesn’t buy the acquisition rumours for the following reasons: 1) Apple doesn’t make big strategic acquisitions; 2) The company wouldn’t integrate with a large organisation; 3) Apple doesn’t need the technology; and 4) It just doesn’t make any sense.

Apple About To Crush Ticketmaster With New Ticketing Technology (Patently Apple)
Apple patents anything that moves, and many of the company’s ideas never see the light of day. But Patently Apple has written about an interesting one called “Concert Ticket +.” The idea is to enable concertgoers to purchase tickets through iTunes then present the e-ticket received by Near Field Communication (NFC) wirelessly or via barcode scanning. The technology can be used for a whole host of other things as well (coupons, movies, Broadway shows, sporting events, etc.). The U.S. concert ticket market in the U.S. is estimated at around $5 billion.  Last month TBI Research analyst Rory Maher wrote that NFC could be the technology that drives mobile commerce to mass-market status.

The “New Apple” Deserves A 30x PE Multiple (That’s $480 Per Share) (The Street)
Apple is now a mobile device company. That means their products get replaced every 18 months; a shorter cycle than the traditional PC market. The first calendar quarter is usually Apple’s weakest, however Q110 iPhone unit sales outpaced Q409’s sales (a holiday quarter). As a result, because Apple is becoming less sensitive to seasonal sales swings, the company needs to be revalued. Growing revenue by 49% and earnings by 90%, the company deserves nothing less than a PE multiple of 30x. Based on $16.00 expected EPS in 2011, you get a $480 stock price. That’s a lot of upside.

Apple Stock More Undervalued Than Microsoft (CNBC Video)
CNBC’s Jim Goldman talks to Peter Misek of Canaccord Adams on how Mr. Softie compares with Apple. Microsoft is posed to capture some of the $50 billion PC upgrade cycle from consumers, but Apple’s stock could see the most upside in the next year. The last 10 years Apple has crushed Microsoft on innovation and iTunes will turn out to be the powerhouse for the company.

Apple Is A Stock You Can Fall In Love With (The Iconoclast Investor)
The investment advice goes, don’t fall in love with your stocks. If you are a consumer of a product, it generally clouds your ability to sell the underlying parent stock at a reasonable time. Paul Goodwin at The Iconoclast Investor says, this rule doesn’t apply to Apple anymore. “Don’t let loyalty or affection cloud your judgment.  You buy stocks to make money.” And Apple will do just that.

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