These 3 Stocks Will Beat Apple to $1,000

It was business as usual for Apple (Nasdaq: AAPL  ) last week. The technology giant crushed Wall Street's earnings estimates...again...and reinvigorated talk on Wall Street that the stock was on its way to the psychologically significant $1,000-per-share mark.

On the other side of the coin, many have also argued that the law of big numbers has crushed any company that has ventured much beyond the $500 billion market value before -- and there is truth to this statement. In late February, Apple became just the sixth company to ever cross the $500 billion market value plateau, joining Microsoft, Cisco Systems, General Electric, Intel, and ExxonMobil. Suffice it to say, these five haven't fared too well since peaking above $500 billion years earlier:

Company

Peak Market Cap 
(in billions)

Current Market Cap 
(in billions)

Difference

ExxonMobil $527.1 $405.9 (23%)
Intel $509 $141.9 (72%)
General Electric $601 $209.3 (65%)
Cisco Systems $557 $107.6 (81%)
Microsoft $642 $268.7 (58%)

Sources: CNN Money, Bespoke Investment Group, Yahoo! Finance. Market values current as of April 27, 2012.

For all but ExxonMobil, you could make the argument that irrational exuberance was to blame, but history has thus far proven unkind to loftily valued companies.

As for me, I'm rooting for Apple as I do think at some point it will surpass that psychologically important $1,000-per-share plateau based on its undeniably strong growth prospects. But that doesn't mean that other companies won't beat Apple to that special $1,000 mark.

Today, I want to take a look at three companies that I feel have what it takes to beat Apple to $1,000. Now here's the shocker: Neither Google (Nasdaq: GOOG  ) nor priceline.com are one of those three stocks.

Google, in its recently released first-quarter earnings, did report a 39% increase in revenue, but that came, once again, with the caveat that cost-per-click ads are declining. Without high-margin CPC growth, I don't see how Google will reach $1,000. As for Priceline, I've made my case before that its valuation simply doesn't seem sustainable.

So throw the preconceived notion that either of these two companies will beat Apple to $1,000 out the window and take a gander at these three stocks that I feel will beat Apple to the punch.

MasterCard (NYSE: MA  )
Credit service companies are dominant in basically any economic environment, which makes MasterCard, to me, a shoo-in to wind up at $1,000 before Apple.

MasterCard and peer Visa are merely credit transaction processors, which means they have no default risk. That risk falls to the banks that actually decide to lend credit to consumers. This means MasterCard needs to focus on only two things: increasing market share and expanding into emerging markets.

Based on comments from MasterCard CFO Martina Hund-Mejean, 85% of all transactions worldwide are still executed using cash, which leaves credit processors with a huge pool of untapped customers. We're also beginning to see just how important the prepaid debit market is for MasterCard, which reported 19.6% growth in gross dollar volume thanks to prepaid debit cards.

We also need to remember that MasterCard is sitting on a moat of cash. The company's strong cash flow and lack of debt afford it incredible flexibility that few other financial service providers possess.

Intuitive Surgical (Nasdaq: ISRG  )
The maker of the da Vinci robotic surgical system keeps producing, year in, year out. With no direct competition at present, Intuitive Surgical is enjoying enormous pricing power for its robotic systems, as well as the high margins that come with being able to control pricing.

What's more, Intuitive Surgical dispelled the thought that its growth was slowing when it reported its first-quarter results two weeks ago. The company easily ran past both sales and earnings expectations, but more important, it boosted its full-year forecast for surgical procedures as well as its annual revenue projections over prior guidance.

It's likely that MAKO Surgical and other competitors will present a formidable threat years from now and that the da Vinci surgical system's price will eventually shrink, but I'd be surprised if that affects Intuitive Surgical's results in any meaningful way over the next three to five years.

Like MasterCard, Intuitive Surgical is loaded with cash ($971 million), and is projected by analysts to grow by 21% annually over the next five years. It isn't the cheapest stock on the block, but it has a monopoly on an in-demand product in a field that is only bound to see increased demand. It will beat Apple to $1,000.

White Mountains Insurance Group (NYSE: WTM  )
That's right; I said it! A property and casualty insurance holding company is going to beat high-growth Apple to $1,000!

White Mountains Insurance Group has been on my radar for a long time due to its prudent fiscal management, steady shareholder returns, and the fact that it's consistently undervalued relative to its book value. Even now, after the steady run the company has had over the past year, White Mountains sits below its book value of $565 per share. I can't quite figure out why that's so, because the company's subsidiaries locked in another solid quarter last week.

OneBeacon Insurance reported a healthy combined ratio of 93.6% for the quarter as premium payments for its professional, technology, and accident insurance lines rose. Sirius Group logged an even more impressive combined ratio of just 84% as catastrophe losses were small. Gross premiums rose by 5% for Sirius. Even White Mountains investments segment got in on the fun with fixed-income returns helping its portfolio return 2% during the quarter. White Mountain also repurchased nearly one million shares at an average discount of 10% to book value, which helped add $7 to overall book value.

The best part about White Mountain is that it still has $1.8 billion in undeployed capital that it can continue to use on share repurchases and acquisitions as it sees fit. It may not have the flash of Apple (no pun intended), but I feel it has the right mix of value and growth to beat Apple to $1,000.

The race is on
The race is on to see which stock is the first to make it to $1,000. I've made my case for MasterCard, Intuitive Surgical, and White Mountains Insurance; now it's your turn to chime in. Vote in the poll below with your choice of which stock will hit $1,000 first, and add a comment as to why you chose the stock that you did.

Interested in three more stocks that could help you retire rich? Consider yourself lucky, because you can have access to our latest report on the subject for free! Just click here for your free download.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He thinks most analysts' price targets are a joke. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Apple, Intel, Microsoft, Cisco Systems, Google, MasterCard, Intuitive Surgical, MAKO Surgical, and White Mountains Insurance Group. Motley Fool newsletter services have recommended buying shares of Apple, ExxonMobil, Intel, Microsoft, Google, priceline.com, Visa, Intuitive Surgical, and MAKO Surgical, as well as creating a bull call spread position in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's both free and priceless at the same time.


Read/Post Comments (29) | Recommend This Article (65)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 03, 2012, at 11:25 AM, iphonerulez wrote:

    Don't forget Priceline which is my choice for the first to hit $1000. That company doesn't seem to have any baggage holding it back. Consumers love William Shatner as the spokesperson.

    I don't think Apple has a prayer of ever reaching $1000. The stock is totally manipulated by hedge funds that will never allow Apple stock to freely run. Apple shouldn't even be part of the list.

    My next choice would be MasterCard. However, I never thought Intuitive Surgical could acquire enough revenue to reach that lofty $1000 area due to cutbacks in the health care sector. It's definitely a fine stock though and will likely go higher than Apple.

  • Report this Comment On May 03, 2012, at 12:22 PM, Carelea wrote:

    Microsoft will hit $1000 with the new Window 8 OS

  • Report this Comment On May 03, 2012, at 5:06 PM, sheldonross wrote:

    MSFT is gonna be a 30bagger with the release of Windows 8?

    Wow, that's impressive.

  • Report this Comment On May 03, 2012, at 10:38 PM, lowmaple wrote:

    appl has the better chance because of the euphoria that will ensue whenever the new exciting news hits in the future. It is the movie star of the stock world.

  • Report this Comment On May 04, 2012, at 10:12 AM, bhessel wrote:

    Yeah, but will anyone beat BRK-A to $100,000? Oh, wait…nevermind.

  • Report this Comment On May 04, 2012, at 10:45 AM, rojostyle wrote:

    aapl will win. it's future growth will take good care of the stock price.

  • Report this Comment On May 04, 2012, at 1:36 PM, BigFatBEAR wrote:

    Apple would need a market cap close to 1 trillion to hit $1000 per share. Good luck with that... (now maybe if they innovate a TON for decades to come, and the middle class mushrooms rather than wilts...)

    But for ISRG to hit $1000, it just needs a market cap near 40 billion. I'm thinking that's a tad more plausible...

  • Report this Comment On May 05, 2012, at 12:31 PM, beechtree1 wrote:

    Carelea, could you give us your calculations for your

    assertions that MSFT would beat the rest to the $1000 price per share.

  • Report this Comment On May 05, 2012, at 12:47 PM, LoriFool wrote:

    Facebook

  • Report this Comment On May 05, 2012, at 1:16 PM, cindalita51 wrote:

    Call me crazy, but I think "Chipolte Mexican Grill" has the potential to hit $1000.00 as long as they keep the growth steady by building new restaurants abroad. My favorite company right now is Whole Foods because they are in a sweet spot with no competition. I don't see them hitting $1000.00, but you never know?

    As far as all the companies listed above; there is no question in my mind that "Apple" will surpass all the rest b/c the innovation never stops! Whether it's a better I-Phone, I-Pad, PC's, etc...... rarely do you here about any glitches within their product line, and if you do, Apple always stands behind their products to rectify the problem ASAP! I have 8 children, and my name is not Rick Santorum, but my children have only wanted Apple computers, phones, etc...for as long as I can remember. My oldest son who is a stock broker, still has his Apple PC from college which was 9 years ago, and has the I-Phone 4, the I-Pad 3, and his entire brokerage firm runs on Apple. My daughter who is the youngest of 7 brothers has had an Apple PC since she was in middle school; now a Sophomore Cheerleader at LSU with a new Apple PC, and has a Birthday next week and has already informed us that all she wants is an I-Pad and the new I-phone 5!

    My point being that Apple products are what everyone wants b/c they are the best, and until someone comes out with an "Orange," Apple will continue to surprise to the upside!!!!!!!!!!!

  • Report this Comment On May 05, 2012, at 1:43 PM, dag154 wrote:

    I am highly impressed with your ability to foresee the future.

    What happens if they have a stock split?

  • Report this Comment On May 05, 2012, at 2:18 PM, Joemit wrote:

    If MSFT had not split several times it would already be above your target price..

    Though I voted for Intuitive

  • Report this Comment On May 05, 2012, at 4:49 PM, btinter1 wrote:

    Microsoft to 1000.00 a share. LOL...give me a break

  • Report this Comment On May 06, 2012, at 4:49 AM, cduance wrote:

    rarely do you here about any glitches within their product line, and if you do, Apple always stands behind their products to rectify the problem ASAP!

    Are you kidding...They completely ignored thousands of users when that were complaining about the signal on the iPhone 4 then after months they told there users that they were holding the phones incorrectly and created a document showing how to hold your phone.

    What about the wifi issue with the new iPad which once again thousands of people have been complaining about and apple have chosen to ignore.

    Does it really matter who gets to 1k per share? Isnt it market valuation that matters the most?

  • Report this Comment On May 06, 2012, at 8:55 AM, FoolSolo wrote:

    I don't really understand what the goal is here; is it to pick the stock that will reach $1,000 first, or to pick the company that will reach $1 trillion in valuation?

    MA currently trades at $439/share, with a market cap of $55B and P/E of 27.6.

    ISRG currently trades at $565/share, with a market cap of $22.4B and P/E of 42.75.

    WTM currently trades at $523/share, with a market cap of $3.4B and P/E of 32.4.

    AAPL currently trades at $565/share, with a market cap of $528B and P/E of just 13.8.

    I don't quite understand this exercise, so I don't see the point of comparing tiny little WTM to a game changing behemoth like AAPL, they are not in the same universe. Even MA, the largest by market cap in the list of prospects, is a tenth the size of AAPL.

    Based on current P/E multiples, AAPL at 13.8 commands the smallest multiple of the bunch for the hottest brand in the world. Assuming all else remains the same, if AAPL stock was trading at $1,000 they would have a P/E of just 24.4, still below all three prospects on the list. It seems to me AAPL should already be trading for $1,000 based on their growth, their cash in the bank, and their low P/FCF below 12.

    If you like to gamble on such things, I think your odds are far greater with your money on AAPL than anywhere else. Even if it doesn't ever reach $1,000/share, your risk/reward ratio is far better putting your money on AAPL than any of the others.

  • Report this Comment On May 07, 2012, at 12:03 AM, sigheide007 wrote:

    It's a no brainer. Priceline will hit $1000 before

    any other company.

  • Report this Comment On May 07, 2012, at 1:53 AM, dsciola wrote:

    According to this article, going above 500mm in market cap can be kiss of death for a companies stock price and its shareholders...

    I'de be curious to know the valuation on those 5 past mega-market cap performers when they hit their peak 500+ market cap. Apple to put into context is currently valued at 10.2x forward earnings, 13.8x past earnings, 3.7x sales, 5.2x book value, and less than 25% of its 3yr historical FCF growth using a reverse DCF.

    What were these valuations like for XOM, GE, INTC, CSCO, and MSFT during their peak market cap? Knowing this would provide a more apples to apples comparison for AAPL and its shareholders.

    Dom

  • Report this Comment On May 07, 2012, at 2:10 AM, phillman6 wrote:

    There sure are a lot of Apple Bashers. cduance Apple voluntarily replaced the batteries in out of warranty ipods. I was sent the lastest model in return since they didn't have any refurbished ones of my model. More memory no less.

    And help at the genius bar is free even for out of warranty products, one on one. You just can't beat that. The few times I have called Apple SOS or gone to the genius bar I have been more than impressed, nice english speaking people not a foreigner that was hard to understand. Though we did have a good laugh one time when two 'genius' were discussing a problem with another customer and I suggested something, and they came back and admitted mine worked. They replaced the part I needed for free even though that wasn't normal for my advise. They don't have their heads in a cloud.

    But as far as the iphone 4 reception problem goes, they are a business, and need to make sure of the problem before just paying out millions unnecessarily to solve a problem that might not exist. Look how long Toyota took to solve their acceleration problem, and life was involved! You'd think you would want that sort of due diligence in your company, especially when life is not at stake (well maybe, but not as seriously).

  • Report this Comment On May 07, 2012, at 11:42 AM, COS911 wrote:

    You also have to compare real valuations, not nominal, otherwise the comparison is truely worthless. Right now AAPL hasn't acheived the real valuations the other $500B (nominal) companies have because of iinflation--but they have also not achieved their valuation with a bubble like the others did. Seems a most foolish, and not Foolish, exercise.

  • Report this Comment On May 07, 2012, at 11:55 AM, mikecart1 wrote:

    MA and ISRG has the best legit shots at the $1000 mark. ISRG is at $562 with only a $22 billion market cap. If it just hits $40 billion market cap with its new medical products, it will easily hit $1000/share.

    AAPL has the least likely shot of hitting $1000/share because it will have to create another epic product equal to that of the first iPhone and iPads.

  • Report this Comment On May 10, 2012, at 9:35 AM, sanit87 wrote:

    Apple when it hits walmart with annex stores and don't forget china.

  • Report this Comment On May 11, 2012, at 11:47 AM, RLoder wrote:

    Woopdeedoo. Stock price to me is at a random point because of the number of shares outstanding. How many decades ago did BRK-A cross the $1000 mark? This should purely be a discussion of market cap.

  • Report this Comment On May 11, 2012, at 12:00 PM, RigelKent wrote:

    truly a silly exercise with no applicability in making investment decisions. Is this what Foolish marketing has come to?

  • Report this Comment On May 11, 2012, at 12:27 PM, jhumroo22 wrote:

    Great comment FoolSolo.

  • Report this Comment On May 11, 2012, at 12:35 PM, spsu03 wrote:

    Just skimmed the article so maybe I missed it, but what is the point of this article? $1000 stock price means nothing without the market cap. If a $1000 stock price was such a big deal, just reverse split your stock and you are there. No change in value of the company..no value change to the shareholder. Sad that Fool.com plays into the hype of 'stock price' versus actually teaching the individual investor that stock price means nothing....market cap/PE/etc. tells the story.

  • Report this Comment On May 12, 2012, at 1:44 PM, SgtMK wrote:

    Funny thing, PCLN, MA and ISRG all took hits this week. Minor bumps in the grand scheme but I agree with everyone that questions the purpose of this article. Like it's a contest that the company is participating in. Let me assure you, a million and 1 things in this world can happen to prevent these companies from coming close to $1,000 per share.

    Ridiculous.

  • Report this Comment On May 12, 2012, at 6:09 PM, armtom wrote:

    Intuitive Surgical has no compettition. The demand for robotic surgery is increasing along with an aging population. It will hit 1,000 first.

  • Report this Comment On May 12, 2012, at 10:24 PM, garyh3420 wrote:

    Priceline will hit 1000 first...

  • Report this Comment On September 11, 2012, at 7:41 PM, WineHouse wrote:

    WTM has been increasing its price share mostly by buying back shares of stock! In fact they had a big tender offer just a few months ago to bring more shares out of circulation. If they bought back 90% of their shares, the shares might be valued at $5,000 per share, but SO WHAT? And their forward P/E is sort of huge! I think WTM share price has been manipulated by management in cohoots with the mutual funds that own 74% of the outstanding shares.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1878248, ~/Articles/ArticleHandler.aspx, 10/21/2014 1:54:57 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement