Apple Inc. (AAPL) just topped $100 a share and broke through all-time highs set in late 2012 — the same record levels that preceded a roughly 40% flop in AAPL stock across the next several months.
So is this new high for Apple stock different, or is a similar crash imminent?
I think the gains are much more sustainable this time around in AAPL stock. And while Apple admittedly does come with some volatility and clearly has threats in the form of competitors like Google (GOOG), I think AAPL stock is a strong buy right now — even as it pushes up against new all-time highs.
AAPL Stock Tailwind
Of course, Apple stock has been much higher than $100 a share — but the tech giant executed a 7-for-1 stock split in June, so split-adjusted, we are actually right around the same level.
The previous high for Apple stock, according to Yahoo Finance data, was an intraday record of $705.07 on Sept. 21, 2012. That adjusts to about $100.72, meaning yesterday’s intraday high of $101.09 for AAPL has eclipsed the mark.
But it’s important to note that this is not just a short-term pop, but part of a longer-term trend. Apple stock is up 25% year-to-date in 2014 vs. just 7% for the broader S&P 500. Furthermore, AAPL stock has nearly doubled from its early 2013 lows.
That’s quite a shift in sentiment.
Even after this run, however, Apple still has a modest forward price-to-earnings ratio of about 14. That seems to hint that AAPL stock still is fairly valued, even at these new record highs.
Reasons to Buy Apple Stock
Looking forward, there are a lot of reasons to be bullish about AAPL for the rest of 2014 and beyond:
- iPhone 6 Launch: According to reports, Apple stock averages 23% gains after a new iPhone launch. And the highly anticipated iPhone 6 event in September could reveal an AAPL gadget with a bigger screen that could go toe-to-toe with Android powered devices like the Samsung (SSNLF) Galaxy line.
- Dividends and Buybacks: Apple is set to return about $130 billion in capital to shareholders through calendar year 2015. The dividends are nice, with AAPL stock yielding 1.9% right now, but the buybacks will ensure continued earnings growth and build a floor under share prices.
- Enterprise Growth: A recently announced partnership with IBM (IBM) will deliver a suite of business apps, cloud services and even enlist IBM as a sales force for Apple gadgets. Between this move and the slow death of BlackBerry (BBRY), Apple could see serious gains in the enterprise gadget space going forward.
- Emerging Markets: AAPL stock lives and dies on sales of its iPhone, and brisk sales growth in China has been powering Apple earnings as of late. Continued growth in emerging markets could mean big upside, even if developed markets don’t have dramatic gains ahead.
All in all, this tech giant is going strong and has a lot to offer investors. I think Apple stock is still a buy even at new all-time highs.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
