Apple marked a milestone this week, with its market capitalization topping $700 billion, a first for a U.S. company. Soaring iPhone sales, particularly in China, have helped push Apple shares up to $126, which represents a whopping rise of 63 percent during the past year.
And CNBC commentator Jim Cramer
sees plenty of room for further gains.
"In an era where the average stock sells at about 18 times earnings, it's out and out ridiculous that Apple sells at merely 14 times earnings, given its balance sheet, sustainability of earnings, breadth of product and wondrous engineering," he said on his "Mad Money" show.
Apple's profit totaled $18 billion for the quarter ended Dec. 27, up 38 percent from $13.1 billion a year earlier.
Cramer suspects investors are reluctant to push the stock higher because the market capitalization is already so lofty. But that idea doesn't hold water, he said.
"In short, Apple's stock should be worth more, perhaps much more, which is why, as always, I say don't trade it, just own it."
Morningstar analyst Brian Colello
puts Apple's fair value at $120. He's positive on the company but with caveats.
"We believe Apple's strength lies in its experience and expertise in integrating hardware, software, services, and third-party applications into differentiated devices that allow Apple to capture a premium on hardware sales," he wrote on Morningstar.com.
"Although Apple has a sterling brand, strong product pipeline, and ample opportunity to gain share in its various end markets, short product life cycles and intense competition will prevent the firm from resting on its laurels, or carving out a wide economic moat, in our opinion."
© 2021 Newsmax Finance. All rights reserved.