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Is Apple stock worth $500?

This week Apple stock reached milestone price of $500 per share putting valuation of nearly $470 Billion to Apple. While Apple deserves every bit of this valuation, as investor one has to wonder how much more upside there is to Apple stock? I am sure you must have seen many articles on how Apple is still "cheap" at  $500. While on current valuation basis, I agree that it looks cheap, there are many potential dangers one has to worry if considering for long-term investment. Let's look at some of the past historical perspectives.
Most valuable companies in recent past
  • Microsoft in 1999
  • Cisco in 2000 (for few days)
  • GE in 2000
  • Walmart (at some time in past one decade)
  • GM - sometime in past 5 decades
  • IBM - I don't know fact but I am sure it git this title at some time
  • Exxon - Company which had this title for longest time in recent history
  • Apple - current king of valuation
Let's look at this differently:
Current valuation of Apple ($470 Billion) is more than
  • Google ($200 B) + MSFT ($262 B) combined OR
  • All major telecom companies (AT&T, Vz) + all major railroad companies (NSC etc) + all US car companies (Ford, GM) combined OR
  • IBM + ORCL + CSCO combined OR
  • All computer companies (Dell, HPQ) + All mobile companies (Samsung, Nokia, RIMM) combined
When we look at total capitalization of listed companies in countries:
  • 3-4% of total US listed companies (around $15 trillion)
  • More than 30% of **ALL* listed companies in India's stock exchange
  • and so on
Now the question is? Is this sustainable. Biggest threat of Apple's valuation would be Apple itself. It has been doing so amazing well that investors have started expecting similar outstanding results from Apple every time. But given its size, it's just matter of 2 years before Apple's growth would fall below 10% and that would cause stock to stop going up. For now, Apple stock would most likely touch $550 to 600 giving Apple more than $500 Billion market cap. That would be the time for investors to press exit button. 
I love Apple as company and Apple's products (in fact I am eagerly waiting for ipad3 and iphone5). But when it comes to Apple stock, I would stay away for now!
Have a great weekend!
/Shyam






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