Apple becomes most valuable company. Or does it?

Apple became the most valuable company ever last evening. But not on an inflation adjusted basis, but then again who is checking that? It turns out that there are some folks. The stock closed at a 52 week and all time high at 665.15 Dollars a share, to give the company a market valuation of 623.52 billion Dollars. This tops the Microsoft all time high back in December of 1999, where the company was grossly over-valued at 616.34 billion Dollars. The strike out is for obvious reasons, Apple currently trades on a multiple of only 15.64 times, historic that is.


For the financial year to end September 1999, Microsoft earned 34 cents per share. 34 cents? There has been one stock split on the 18th of February, so adjusted for that you come to 68 cents for the full year. At that stage, adjusted for the prior split the stock reached 58.37 Dollars the day before Christmas 1999. Back then the stock then traded on a historic valuation of 85 times earnings. You can adjust that market valuation back then for inflation (see someone here did that -> Apple Becomes the Most Valuable Public Company Ever, With an Asterisk) and come to around 856 billion Dollars, but the point that I am trying to make is that back then Microsoft was way overvalued. Crazy.


And Apple? Well, the stock hardly looks stretched at just over 15 times earnings. The analyst community, for what it is, suggest that the company can deliver next fiscal earnings of 52.77 Dollars per share. Check out the MarketWatch Apple Inc. analyst estimates. And adding more to the conversation is that someone has gone further back and said on an inflation adjusted basis that IBM would be worth 1.3 trillion Dollars, had it maintained the same rating afforded to the stock back in 1967.


Some people are taking this all time high in their stride, others are rubbishing the facts (claims), suggesting that the world has seen more valuable companies before, on an inflation adjusted basis. I am taking a different angle. I am suggesting that the valuations are probably more important than absolute market value. And on that basis I think that you can continue accumulating Apple, in anticipation of the release of a new iPhone and increased sales of the iPad, which have multiple uses in both the work and education spaces/places. I see average price targets, but you know my view on that. Earnings. Future, both immediate and longer dated depends on where the stock will trade. Because as sure as eggs are eggs (and Blackberry's are Blackberry's), the new products are being lapped up by Joe Public. Be careful, that can all change in a flash, consumers are notoriously running at the next new thing. Their greatest risk is also their greatest attribute, making amazing products, keeping the consumer allure.