Is Apple Stock Too Big To Grow?

Apple sells $232 billion worth of iPhones, iPads, iPods, and other merchandise per year. The margins on each item sold are so high that $51.6 billion flows to shareholders as net profits. Buy a $1,300 computer from them? A pure $286 of that will flow go to shareholders as profit that can be used to repurchase stock, fund growth from existing operations, build up the large cash hoard, or do whatever is deemed to advance the interests of the corporation.

It is this enormous size, coupled with the expectations of eventually decreasing profit margins or technological disruption, that have kept the stock’s P/E ratio at a seemingly attractive price point despite 70.5% annual earnings per share growth over the past ten years (and 52.5% annual earnings per share growth over the past five years). As things stand now, Apple earns $9.22 per share and trades at $113 per share, for … Read the rest of this article!