Lovers of round, juicy milestones can rejoice. Apple (NASDAQ:AAPL) hit the $200 mark in intraday trading yesterday.

It closed a few ticks lower than that, but this doesn't mean you need to toss out the bundt cake and return the confetti to Party City. After all, is there any doubt that Apple will eventually surpass that mark and head higher, adjusted for the obviously pending stock-split announcement?

Apple is cheap. Yes, even at $200.

I can already see the value investors shaking their heads derisively. "There's no way that Apple can be cheap at 40 times this fiscal year's earnings, or even 32 times next year's profit target," they say.

There is a way, my bearish friends. And as fate would have it, it's going to come at the expense of the bears who are dumb enough to see history repeated 19 consecutive times and still not make sense of Apple's true potential.

Getting it right the 20th time
Yes, Apple has crushed Wall Street's profit targets in each of the past 19 quarters. Sometimes, it isn't even close.




Q1 2007




Q2 2007




Q3 2007




Q4 2007




Analysts keep chasing Apple, but to no avail. The $6.34 a share that Mr. Market expects Apple to earn next year? That guesstimate was $5.46 a share just three months earlier. Apple has them huffing and puffing, and there's little reason to believe that Wall Street has finally caught up with Apple's potential.

Think about the raised estimates for a second. If Apple had hit $200 three months ago, we would have been talking about Apple trading at 37 times fiscal 2009's bottom line. Today, hitting the $200 milestone finds Apple fetching around just 32 times fiscal 2009's projected profitability.

Forbidden fruit
Obviously, Wall Street's perpetual underestimation of Apple has served its investors well. Shares have more than doubled -- and nearly tripled -- over the past year.

It's easy to get dizzy at these heights, but ask yourself where the ceiling is. The company isn't really bumping up against it in terms of market share, even in the seemingly landlocked iPod space.

Let's start with computing. MacBooks and Apple desktops were all the rage on (NASDAQ:AMZN) over the holiday selling season, but Apple still commands just a 6.3% slice of the domestic PC market, according to market watcher IDC (and a significantly thinner sliver of the global market). Apple is gradually gaining on the big boys, and that bears watching, because while companies like Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) feast at the hardware table and Microsoft (NASDAQ:MSFT) eats at the software smorgasbord, Apple can pig out at both troughs.

The iPhone is still in its infancy, and one shouldn't read too much into the trigger-finger price cut. Because most cell-phone handsets come shackled with two-year subscription deals, it is over the next two years that iPhone buyers will make the initial leap. The iPhone isn't slowing down Research In Motion's (NASDAQ:RIMM) BlackBerry at the moment, but Apple still has time to make a dent and eventually grow out of its exclusivity with AT&T.

This brings us to the iPod. Yes, Apple already commands the lion's share of the portable media player market. Earlier this year, the company passed the 100-million-unit mark in terms of iPods sold, leaving rivals such as SanDisk (NASDAQ:SNDK) and Microsoft's Zune fighting for scraps. Apple is unlikely to gain much more in terms of market share, but what if the pie itself is growing? The consumption of digital music is growing, and Apple is there with both the iPod and the iTunes Music Store.

Apple isn't perfect. Don't get me started on the Apple TV paperweight. One also shouldn't expect Apple's 2008 run to mirror its 2007 gains, because it would topple Microsoft at that point to reign supreme as the tech stock with the chunkiest market cap.

Then again, isn't that where Apple is ultimately headed anyway? You know $200 isn't the end. It's only the beginning.

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