The question is not whether Apple is going to $500 a share but when will it. Monday? Friday? Next week? Very few things in trading are a given, but the probabilities are heavily weighted that Apple will go to $500 on Monday. The only thing that can truly stop it is some unforeseen Greek crises that causes a huge fleeing of equities but even that is far outside the reasonable probabilities.
What did Apple do Friday when the Dow Jones Industrial Average plunged 140 points? It turned green and rallied to all time highs. Apple is a safe haven for mutual fund managers that have to stay invested in stocks regardless of what the market does. Apple is in itself a “risk off” trade and a safe place to park capital.
Apple is not a ‘Bubble’ it is not a stock that traders and investors are hoping will be profitable, it is not a fad, it is fast becoming the greatest company of all time based on growth and profitability through market and industry dominance. It has real profits, real growth, real innovation, and is dominating the industries of mobile internet, cell phones, and computer note pads.
It is not in danger of competition, competition is in danger of Apple putting them out of business. Apple is not overvalued with a 14 price to earnings ratio it is UNDERVALUED with its 68% annual earnings per share growth and last quarters EPS up +116% and last quarters sales up +73%. Why is the P/E not bigger? Investors are afraid that Apple is just too big for continued growth at its current levels. It also has 0% debt and nearly $100 billion in cash on hand. This is not an internet bubble stock, this is a company that has already changed the world and continues to do so. It is like General Motors, Standard Oil, Ford, AT &T or Berkshire Hathaway was in their best days of industry domination and incredible growth and cash flow.
This is one stock that most value investors, growth investors, CAN SLIM investors, trend followers, day traders, option traders, hedge funds, and mutual fund managers all have on their watch lists ready to get in at the first opportunity.
The only things that can knock this stock down is a sharp general market correction or an Apple miss step itself, but the buyers waiting to get back in at key levels of support is probably staggering.
$500 for Apple is as close as a sure bet you will find in the stock market, I believed that price level would be hit back when AAPL was trading at $400 a share. See this interview I did with a freelance writer for Forbes.Com at the beginning of January when AAPL was trading at $412.
Will Apple hit $500 is the wrong question, the right question is how are we planning to trade it and capture the up trend and let it go as far as it wants to go and what is our exit strategy to bank profits?
Apple may be the only stock we need to trade in 2012 to have a great year, let’s get our trading plans ready and trade what we see on the charts.