By Andy M. Zaky writes a fantastic analysis of the growth potential of Apple (AAPL) stock price at Fortune Tech CNN:
The fundamental difference between other large cap tech stocks and Apple is Apple’s unique cash generating abilities, its cash position, and its extraordinary 70% growth. Apple trades at a lower cash multiple than any other large cap tech stock and has more net cash on the balance sheet than any other company in the S&P 500. At a $305 billion market capitalization, Apple trades at only five times its cash. Remove that cash from its market capitalization, and Apple trades at only a $245 billion enterprise value, or $268 a share — that’s only 14 times earnings.
But even more impressive is Apple’s ability to generate cash. In the last four fiscal quarters alone, Apple’s total cash rose 50% from $39.8 billion to $60 billion — a jump from $43.26 in cash per share to $64 in cash per share. Based on very realistic projections, Apple will probably end the year with $81 billion in cash, or $86 in cash per share. For the 2012 fiscal year, it will likely post at least $120 billion in cash or $125 in cash per share.
In fact, it is very likely that Apple will have more cash than its current market capitalization in less than five years. Once Wall Street begins to catch on to this reality, Apple shares should see a major upside correction. And this is precisely why Apple shouldn’t trade below a 20 P/E ratio over the next several years.
