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When Amazon.com Inc. (Nasdaq: AMZN) crossed the $1,000 mark on May 31, TV host Jim Cramer was quick to throw out what he called a "red flag."
Frankly, I think he was waving a white one…
Here's why I say that. The host of CNBC's "Mad Money" mostly looked at the price of the stock. He said that "psychologically" $1,000 is a lot to pay for a stock he feels is getting ahead of itself.
That brought him around to saying that other big tech leaders are riding a secular trend that could lose steam, hurting investors along the way.
I believe Cramer's analysis is way off the mark for a couple reasons. First, Amazon still has a long runway in both retail and its cloud sales, where it remains the dominant firm.
Second, and more to the point, I actually predicted back on Oct. 30, 2013, that Amazon would hit this milestone. I said it would be among the "next" members of tech's "Thousand-Dollar Club."
So, today I'll show you why my forecast was on the money for all the stocks I put in that group.
It's a Fool's Errand to Believe "$1,000 Club" Firms Are Done Growing
If you've followed along with me for any length of time, you'll know that I'm more than willing to make bold calls.
Then again, I grew up in a military high-tech household and have knocked around Silicon Valley for 33 years. I'm not saying that to brag but to point out that I have tons of personal experience to back up my rigorous tech analysis.
Now I have to admit, predicting that five tech leaders would each sell for $1,000 a share going on four years ago struck some as going way out on a limb.
However, I backed it all up with solid data that I said would drive the stocks to new heights. I also noted that at the time, many thought The Priceline Group Inc. (Nasdaq: PCLN) was "pricey" because it sold for $1,075 a share.
Today, Priceline trades for nearly $1,900 a share, gaining 76% along the way. But I don't see Cramer waving the "red flag" over that one.
Fact is, four of my original picks have crossed the $1,000 barrier either straight up or on a split-adjusted basis.
The fifth stock was so undervalued that it got bought out by a larger firm. With that in mind, let's look at the factors that drove the five remaining members of the Thousand-Dollar Club and why there's still money to be made on each one…
Amazon was trading for $332 the day that column ran. I noted that CEO Jeff Bezos was determined to dominate online retail. Yes, I said, margins were thin at the time, because he keeps pouring money into back-end operations.
Bezos has spent a small fortune on robotics and other platforms that ensure buyers get their products quickly. Indeed, Prime members often receive orders on the same day they make them.
That's not all that makes Amazon a great company. Bezos was one of the first to see the shift to cloud computing, in which clients get data and apps via the web rather than on their expensive networks. It's now a roughly $12 billion a year business – and it could double in the next five years.
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Apple Inc. (Nasdaq: AAPL) hit my target price back on March 28 on a split-adjusted basis when it traded at $142.85. This proved to be the most controversial stock in the Thousand-Dollar Club.
Stuart Varney, the FOX Business host, never let me forget that bold call. But once it hit the target two months ago, I doubled down on that first one with a prediction that Apple will be the first $1 trillion market-cap stock.
With a market cap of roughly $800 billion, it needs to advance by about 25%. But I'm not the only analyst making that call on Apple. For one, Warren Buffett agrees with me.
After all, Apple accounts for the bulk of all profits made in the entire smartphone segment. It now is the leader in wearables and is growing its high-margin services unit. That's a roughly $25 billion business that also could double in the next five years.
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.