This article is an excerpt from Barron’s 10 favorite stocks for 2021. To see the full list, click here.
Apple has been a juggernaut in 2020. Its shares have climbed 74%, to a recent $128, on its way to a world-leading $2.2 trillion market value.
The stock, now trading for 32 times projected earnings of $3.95 a share in the fiscal year ending in September, is historically expensive. But Apple (ticker: AAPL) has never been stronger, thanks to concurrent product cycles, notably the current one, which includes the hot new iPhone 12. Apple is reportedly boosting production of that mobile phone by 30% in the first half of 2021.
Apple / AAPL*
*Sept. fiscal yearend; E=Estimate
Source: Bloomberg
The work-from-home trend and the new Apple-designed M1 chip have re-energized the Mac laptop franchise. Sales are surging for devices including watches and the new $549 AirPod Max over-the-ear headphones, which are sold out into the first quarter. Then there is a lucrative and annuity-like $60 billion services business, with new offerings like Fitness+.
J.P. Morgan analyst Samik Chatterjee argues that investors may have to temper their expectations after 2020, but he still sees upside to $150 a share, based in part on an above-consensus earnings estimate of $4.45 a share in the current year.
Write to Andrew Bary at [email protected]
