Apple became the world’s most valuable business thanks to a steady stream of products that have captivated consumers. Now, with markets wobbling because of concern that higher interest rates and the coronavirus will undermine economic growth, investors view the company as a relatively safe place to park their money thanks to its consistent sales growth and hefty cash balance.
The iPhone maker jumped 3.5 per cent to US$171.18 Tuesday to lead the advance in the Nasdaq 100 and S&P 500 stock indexes. The Cupertino, California-based company trades at 30 times profit projected over the next 12 months, compared with an average of 22 times for companies in the S&P 500.Article content
Morgan Stanley analyst Katy Huberty argues the stock is undervalued when considering revenue contributions expected in coming years from new products like augmented and virtual reality and autonomous vehicles. “Apple should benefit from a flight to quality especially as upside from new product categories gets priced in,” said Huberty, who raised her price target to a Wall Street high US$200 on Tuesday.
It wasn’t always so: In late 2000, Apple had a market value of just US$4.5 billion, and investors were fleeing the stock, which traded for almost the value of the cash the company had in the bank. Co-founder Steve Jobs had returned to the helm in 1997 but had failed to revive its fortunes, and the iPod and the iPhone were still off in the future.Article content
Surprised Apple shares are not higher especially compared to Amazon & Google.
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