Each year, we take a look back in order to look ahead. We do this by industry, by trend, and ultimately by stock. Here's a closer look at Apple (Nasdaq: AAPL), Fool style.

Foolish facts

Metric

Apple

CAPS rating (out of 5) ***
Total ratings 24,905
Percent bulls 91.7%
Percent bears 8.3%
Bullish pitches 4,859 out of 5,436
Highest rated peers Super Micro Computer, NCR Corp., Stratasys


Data current as of Dec. 28.

With just three stars, Fools who've rated Apple in CAPS remain undecided about the company's prospects. Most agree Apple is pressuring Dell (Nasdaq: DELL) in the desktop and laptop markets, and Research In Motion (Nasdaq: RIMM) and Nokia (NYSE: NOK) in smartphones. Yet few agree when it comes to the Mac maker's valuation.

"Everyone thought the exact same things about Microsoft in the early 2000's as they do about Apple today. Current P/E trends cannot continue forever. It's easy to hop on the Apple bandwagon and say that it's going to be an easy outperform. Apple's products must continue to change as fast as the current fads do," wrote Foolish investor 1947StockGuy earlier this month.

Looking back to look forward
Disagreement is also reflected in the year's big Apple stories at Fool.com:

  • In January, Anders Bylund named Apple as his pick for the worst stock for 2010. More than 1,500 Fools disagreed with my Foolish colleague.
  • Six months later, the crowd looked smart: Apple passed Microsoft (Nasdaq: MSFT) in market value to become the new king of tech. Several of us began to wonder if it was too late to buy Apple.
  • Not two months later, a buying opportunity would emerge when the Mac maker was embroiled in a full-blown scandal over performance issues with the iPhone 4's antenna. "Antennagate," the media dubbed it.
  • Around the same time, Apple fired a fresh salvo in the war for the living room by introducing a $99 version of Apple TV and 99-cent streaming video rentals. A partnership with Netflix (Nasdaq: NFLX) soon followed.
  • By September, we'd seen enough. Foolish editor and tech analyst Eric Bleeker announced our intent to buy shares of Apple. "I'm comfortable with the risks we're taking on to buy Apple at today's prices," Eric wrote at the time.

The shares are up 18% since, thanks in part to strong iPad sales, rumors of a Verizon (NYSE: VZ) iPhone, and excellent financial performance:

Fiscal 2010 Quarterly Performance

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Revenue growth 32.0% 48.6% 61.3% 66.7%
Normalized net income growth 44.3% 68.9% 59.4% 46.3%
Gross margin 40.9% 41.7% 39.1% 36.9%
Return on capital 35.0% 26.5% 25.7% 30.0%


Source: Capital IQ, a division of Standard & Poor's.

And here's what analysts expect from Apple over the next two years, according to data compiled by Capital IQ:

Capital IQ Estimates

2011

2012

Revenue estimate $89,302 million $103,106 million
Normalized profit per share estimate $19.30 $22.69


Source: Capital IQ, a division of Standard & Poor's. Data current as of Dec. 28.

Foolish outlook: bullish
Apple strikes me as appropriately valued. Why? First, 16.8 times next year's normalized earnings estimate is reasonable for a company growing as fast as Apple is. Second, that P/E doesn't account for the $51 billion in net cash and investments on the Mac maker's balance sheet. Despite this, Anders remains unconvinced.

"None of the doomsday scenarios I imagined for Apple actually happened in 2010. That doesn't mean they can't or won't happen in 2011 or 2012, and the stock is now riskier than ever given the steady price advances. Apple can't afford any mistakes next year, lest investors suffer the consequences of a tarnished halo," he said when I asked him about his underperform call.

I'm not so sure that's fair, yet Anders and I have had our say. Now it's your turn to weigh in. What do you think of Apple's prospects at current prices? Please vote in the poll below and then leave a comment to explain your thinking. You can also rate Apple in Motley Fool CAPS.

Interested in more info on the stocks mentioned in this story? Add Apple, Dell, Research In Motion, Nokia, Microsoft, Netflix or Verizon to your watchlist.

Apple and Netflix are Motley Fool Stock Advisor selections. Stratasys is a Motley Fool Rule Breakers recommendation. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He had stock and options positions in Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. 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 owns shares of Apple and Microsoft and is also on Twitter as @TheMotleyFool. When it comes to stocks, the Fool's disclosure policy is a lookie-loo.