Apple Inc. (AAPL) Stock Keeps Marching Toward $1 Trillion Valuation

Apple Inc. (AAPL) Stock Keeps Marching Toward $1 Trillion Valuation
Photo by Szilveszter Farkas

Apple Inc. (AAPL) stock touched yet another new high today, reaching as high as $140.28 riding on the back of commentary from Warren Buffett, bullish analyst reports and a new chart that illustrates why investors are pushing it higher. The iPhone maker has been a Wall Street darling for years, but most analysts agree that Apple stock will soar higher and higher — at least until the iPhone 8 comes out later this year.

Apple Inc. (AAPL) stock peaks before new iPhone launches

Stifel analyst Aaron Rakers advised clients in a research note that if there was ever a time to buy Apple Inc. (AAPL) stock, it’s now. The reason is because returns on the name between six months before a new iPhone launch and the actual launch are quite high.

The average return during the six months leading up to a new iPhone launch is more than 11% since the launch of the iPhone 5. However, investor anticipation leading up to the iPhone 6 launch was so high that returns were much greater at more than 28%, the analyst said. The larger former factor was the worst-kept secret of its day, so Apple stock kept climbing higher and higher, and it seems likely that we’ll see the same thing again this year, based on the great expectations for the iPhone 8.

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Between the OLED display and numerous other rumors that are circulating, investors are betting that consumers will be grabbing up the new phones quickly.

Apple Inc. (AAPL) enjoying the benefit of share repurchases

As Apple Inc. (AAPL) stock continues to rise, we’re also hearing debate about when the company’s valuation will surpass $1 trillion. This is a conversation that has popped up a few times over the last several years, but Warren Buffett, whose firm Berkshire Hathaway greatly increased its stake in the iPhone maker recently, says it doesn’t need to have a $1 trillion market cap. Buffett went on CNBC to talk about his investment and

UBS analyst Steven Milunovich noted in a research report dated March 2 that Buffett is known for preferring companies that buy back stock, which Apple Inc. (AAPL) has been doing. Because of the repurchases, he said the iPhone maker might never be a $1 trillion company, but he doesn’t think it needs to be to be worth owning. He has a Buy rating and $151 price target on Apple stock.

Apple Inc. (AAPL) stock closed down 0.59% at $138.96 on Thursday.

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