Curtain Could Fall on Top Players

While 2004 has been a mediocre year for the major averages, it's been simply phenomenal for stocks like Apple Computer(AAPL), Autodesk(ADSK) and American Eagle Outfitters(ADSK).

In fact, all three companies have been top performers in the S&P 1500 this year after surprising investors with better-than-expected financial results.

Since January, Apple has soared 208% to a four-year high, while teen retailer American Eagle has climbed 162% and design software firm Autodesk has surged 173% to its best level in 10 years.

But can the winning streak continue in 2005?

For Apple, the answer could be yes, although the risk is certainly growing.

Over the past few weeks, several analysts have raised their earnings estimates and price targets on the stock, saying that sales of the company's handheld digital music player, the iPod, have been strong and should encourage customers to buy other Apple products.

On Monday, J.P. Morgan analyst Bill Shope said expectations for the company's sales and earnings growth in fiscal 2005 and 2006 "may still prove conservative."

Analysts surveyed by Thomson First Call expect Apple to earn $1.42 a share next year, up 92% from the 74 cents reported in 2004. Profits are slated to climb 24% in 2006 to $1.75 a share.

Bear Stearns analyst Andy Neff is more optimistic, however. He thinks the company will successfully launch a flash memory iPod in early 2005, and that should help earnings climb 150%. The iPods currently on the market contain a hard drive.

"If iPod drives users to Mac, it could provide more upside," he said, adding that he expects the stock to climb to $72 next year. (Bear Stearns and J.P. Morgan have no banking relationships with Apple.)

Other analysts are calling for even greater gains. Cody Willard, a partner at CL Willard Capital and contributor to RealMoney, said he thinks the stock could hit $100 or more next year, though he has been scaling back his holdings recently after a dramatic run.