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"You heard it here first."
That's what the Fox Business Network's Stuart Varney said after a stock-price prediction I made during an interview rendered the polished TV host momentarily speechless.
During my Dec. 5, 2013, appearance on his popular Varney & Co., I predicted Apple Inc. (Nasdaq: AAPL) shares would be taking up residence in the $1,000-a-share neighborhood pretty quickly. (Post-split, that figures as $142.85 a share.)
Now, technically speaking, you heard it here first, as I had made that same forecast six weeks earlier right here at Strategic Tech Investor.
However, as Varney's reaction made clear, this was the first time any tech analyst had made such a bold public prediction about Apple on national television.
Since then, many have doubted me along the way. Even Varney himself has ribbed me about it more than a few times.
But I've always stuck by this prediction. And I hope you have, too.
If you have, you're sitting on some tasty 80%+ gains.
That's because Apple just broke through that $142.85 mark… shortly after noon Eastern on Tuesday, to be exact.
Where is it going from here?
When History Pays Off
My colleagues who watched that first $1,000-per-share prediction said it looked like Varney was about to jump out of his chair.
But I kept my cool.
That's because I was confident.
Sure, the price target sounded aggressive to Varney and others at the time.
But really, I was being conservative.
I knew what Apple was capable of.
I've followed the Silicon Valley legend closely since the first Macintosh PC came out in January 1984.
I wrote about the firm when it was close to dying back in the 1990s, before Steve Jobs came back to save the company from the brink and launch a series of legendary products.
I was among the first tech analysts to say that iTunes would change the music industry as we know it. And I've seen firsthand the lines outside my local Apple Store every time it releases a new product.
With the iconic iPhone and the Mac computers as anchors, it literally has among the more loyal customer bases and best brands in the world today, if not the very best.
So, when I ticked off the reasons why I was confident in that $1,000 target, I was able to do so with some authority.
As a reminder, here they are again…
- Fantastic cash flow
- Extremely high margins
- Great earnings
- A savvy new CEO
Let's address each of these, starting with CEO Tim Cook.
A Different Kind of Legend
At the time, he suffered from an unfair comparison to Jobs, who had died just a few years before. Wall Street was down on Cook because they didn't think he had Jobs' magic.
I've been around Silicon Valley for more than 30 years, so let me let you in on a little secret.
Jobs was a "black swan." The Valley is full of brilliant leaders, but geniuses like that just don't come along all that often.
Cook has become a great ally to Apple's shareholders. He's bought back some $175 billion of its stock and launched a dividend that yields roughly 2.3%.
Last year, Apple generated more than $65 billion in operating cash and more than $36 billion in free cash flow, money available to distribute to shareholders in one form or another.
It hasn't always been smooth sailing for Cook and Apple. In its second-quarter fiscal 2016 report, Apple suffered its first sales decline in 13 years.
The financial media and Wall Street went into a frenzy – bashing Apple and Cook for months. And the stock sold off.
Of course, as we told you to do at the time, the smart move was to buy on the dip.
Then in January, Apple announced that it had record sales and quarterly earnings per diluted share. The news came after Apple already had regained momentum – and added a rocket booster to the stock.
In fact, since bottoming out May 12, 2016, Apple has gained more than 54%. That's better thanthree time the return of the S&P 500 over that same stretch.
Now, before we get to my latest prediction on Apple, I want to touch on another big prediction I made to the national media.
Next Up: A $1 Trillion Market Cap and…
To my knowledge I'm the first tech analyst to predict that Apple will be the first U.S. company to reach a market cap of $1 trillion. That number now sits at $772.88 billion.
Just days ago, Warren Buffett followed my lead and said Apple will be the first company with a $1 trillion market cap. And this comes from the man whose Berkshire Hathaway Inc. (NYSE: BRK.A, B) is even closer to that mark, with a combined market cap of $817.23 billion.
So like me, Buffett still sees plenty of fairly quick upside ahead. To see why, just look at these numbers…
Apple trades at just 13.7 times forward earnings. That's roughly 32% less than the forward earnings ratio of the tech-heavy Nasdaq 100.
Here's what that tells me.
Here's my next prediction.
Apple is gaining another 50% from here.
If you want to use tech to get on the road to wealth…
If you want to make the kind of money that will fill a retirement account…
If you need to fund your kid's college tuition…
If you're looking to pile up a down payment for the home you've always wanted…
Then there is no better stock to buy and hold for the long haul.
Especially if you snap it up while others are panicking.
I'll see you next week.
- Strategic Tech Investor: The Prediction That Stunned Stuart Varney.
- Strategic Tech Investor: The Next Members of Tech's "Thousand-Dollar Club."
- Strategic Tech Investor: How Wall Street Put Apple Stock in Animal House.
- Strategic Tech Report: How the Apple Watch Led to My Next Big Prediction.
- Strategic Tech Investor: The Road to Wealth Is Paved by Tech.
The post Apple Crosses the "$1,000" Mark – so It's Time for Another Prediction appeared first on Strategic Tech Investor.
About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.