Apple's Long-Lasting Shine

But beyond new products, fans of Apple's stock make the case that the company can continue to outperform the market by simply doing what it has been doing. IDC projects that the worldwide market for digital music players will grow to 106 million units next year. Meanwhile, Apple estimates that it has about 75% of the U.S. market for digital music devices.

Assuming that it can maintain that dominance and extend it worldwide next year, Apple would sell 75 million to 80 million iPods next year, likely more than double the number it will sell in 2005, notes Coleman. Estimating that the company makes $50 on each iPod it sells, that number of total unit sales would yield about $3.75 billion in profit in calendar 2006, Coleman says.

In contrast, Apple earned just $1.3 billion in fiscal 2005, which ended in September.

"The iPod story is powerful enough ... that they don't need help" from new products, says Coleman. Any new products would be "just another source of value creation."

Though Coleman is focusing on the growth of the digital music market, Pip Coburn, CEO of Coburn Ventures, believes that people are overlooking the growth of Apple's retail store base. The company now has some 130 stores, up from just 65 at the end of fiscal 2003.

What's impressive is not only the growth, but the increasing sales that the company is making through its stores, says Coburn, who is long Apple. Based on year-end store counts, the average Apple store made about $19 million in sales in fiscal 2005, up from about $10 million per store in fiscal 2003.

Given that Best Buy (BBY Quote), for instance, has more than 700 stores and Gateway (GTW Quote) had hundreds of retail outlets at its peak, Coburn believes Apple can easily hit 300 stores over the next three years, helping ratchet up sales and earnings.