December 31, 2012
If you're an Apple (NASDAQ: AAPL ) investor, there's no doubt the past three months have been frustrating as the company's shares slid south. Yet, not long ago the company's shares briefly touched past $700 per share. What is needed to get Apple out of its rut and approaching all-time highs?
Senior technology analyst Eric Bleeker explains how P/E compression is at play. Despite being in the top 99th percentile in terms of five-year revenue growth rates, Apple is now among the bottom 20% of all major U.S.-traded stocks in terms of its P/E multiple. That's the result of investors increasingly being uneasy of being willing to pay for future growth.
As Eric explains, without any P/E expansion, even if Apple hits analyst earnings targets through 2014, it'll still be trading at $650 per share. To reach previous highs and soar beyond to $800, P/E expansion and a belief in Apple's future growth is a requirement. To see his thoughts on what will lead investors to pay a higher P/E for Apple, watch the video below.
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