It’s been five consecutive years that Apple (NASDAQ:AAPL) has had year over year success due to its line of iPhones and iPads. Even this year has wrapped up fabulously for Apple (NASDAQ:AAPL), since the launch of iPhone 6 soared 16% for unit sales in the last quarter. If that wasn’t enough, Apple (NASDAQ:AAPL) has also managed to lure in customers in their HealthKit, HomeKit and Apple (NASDAQ:AAPL) Pay. Furthermore, Apple (NASDAQ:AAPL) has many hopes attached to the launch of the iWatch next year. Rumor around the block has it that Apple (NASDAQ:AAPL) stocks will hit its peak next year with shares going rocket high to as much as $150. This has gotten the investors wondering whether that is actually possible or is the Apple (NASDAQ:AAPL) stock being exaggerated. Here is a list of three elements that can determine that.
- Apple (NASDAQ:AAPL)’s P/E: Even though Apple (NASDAQ:AAPL)’s P/E of 18 at this stage seems a lot less then Google’s (NASDAQ:GOOGL) P/E of 28 and Microsoft’s (NASDAQ:MSFT) P/E of 19. But speculations are that Apple (NASDAQ:AAPL) will reach new highs within the next three years.
According to the S&P Capital IQ Data Apple (NASDAQ:AAPL)’s 5 year PEG ratio is 1.3, which stands well below Microsoft (NASDAQ:MSFT)’s 2.8 and exact in line with Google (NASDAQ:GOOGL)’s 1.3.
The indicator of PEG are as follows, if the ratio is one that is considered a balanced trade off of cost and growth figures. A PEG less than one indicates strong bottom lines whereas a ratio above one points at slow earnings while going ahead.
Keeping both these elements in mind, it’s easier to conclude holds much more value than shown at face value.
- Apple (NASDAQ:AAPL)’s new target of $1 trillion: At this point Apple (NASDAQ:AAPL) has a market cap of $700 billion. Speculators are now wondering if this cap could reach $1 trillion, this means the stock price will end up at $170 per share.
Keeping in mind Apple (NASDAQ:AAPL)’s fiscal report for the year, Apple (NASDAQ:AAPL) would need a net income of $55.5 billion or $9.47 per share to reach its $1 trillion target. Also, Apple (NASDAQ:AAPL) would have to do exceptionally well in terms of iPhone sales. JP Morgan (NYSE:JPM) analyst Rod Hall believes that Apple (NASDAQ:AAPL) could sell up to 235 million iPhones next year. Also much is expected of the iWatch, which is projected to sell off up to 60 million units in the first six months of 2015.
It has been revealed that nearly half a million smart watches were sold throughout the US, resulting in $96 million combined revenue, in last year alone. Samsung (NASDAQOTH:SSNLF) made up to 78% of this market, with 70% of the global market at its dock.
Seeing that Samsung (NASDAQOTH:SSNLF) sells up to 2 million units per year, it seems a bit exaggerated to expect Apple (NASDAQ:AAPL) to sell between 30 to 60 million in a year.
Apple (NASDAQ:APPL)’s predictions for next year seem exaggerated and if these expectations aren’t met, the stock is likely to stumble.