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Motley Fool Examines Apple's Stock Valuation

Motley Fool Examines Apple's Stock Valuation

by , 2:00 PM EST, December 16th, 2004

The Motley Fool has published a piece from Kelvin Taylor that looks at Apple's recent, meteoric rise in stock price. There has been a lot of hype in recent weeks about Apple, and much of it has been about the rise in the company's stock.

Set off by both the success of the iPod and the iTunes Music Store, along with what some refer to as the iPod Halo Effect whereby iPod users Switch to the Mac, many stock analysts have raised their target and estimates for Apple. Mr. Taylor looks at the basis for that rise, and whether or not it can continue. From the article:

This year has been very good for Apple. The stock jumped to a four-year high in November after a Wall Street firm doubled its price target from $52 to $100. Absent any sales update from the company since the last earnings report, this Fool wondered about the substance behind such a bullish price forecast.

That substance is, according to the same Wall Street firm, the "new" customer interest in the iPod music player. It seems some on the Street have only recently discovered what music fans already know: iPods are cool and hot all at the same time, and Apple is selling a bunch of them. Recent estimates put sales at four million in the December quarter and 12.9 million for fiscal 2005. Much of the spectacular rise in Apple's stock this year has been due to the huge success of the iPod.

The full article offers a look at three different ways to value Apple from an investment standpoint, and the pros and cons of each. Mr. Taylor's conclusion is a pessimistic one. Read the full article for more.


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

The Mac Observer Spin:

Mr. Taylor raises some very good points, and investors would be well-advised to carefully weigh his words. At the same time, however, one should also consider the opinions of the professional analysts that have issued comments in recent weeks. You can find links to our coverage of many of those comments in Apple Stock Watch Special Report.

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