Apple's Long-Lasting Shine

"You can get to their [expected] earnings numbers easily just from the stores without any heroic assumptions," he says. "Their growth is almost dialed in."

Still, not everyone's convinced. Indeed, with the stock trading around 39 times expected fiscal 2006 earnings (its shares have spent most of December above the $70 level), some analysts and investors have become nervous -- witness the two downgrades earlier this month that sent the stock stumbling on valuation concerns. At its current P/E, the company stock could further slide on any hiccup in its operations.

And the coming months offer a number of potential trouble spots. Although the transition to Intel chips hasn't seemed to affect Apple's computer sales to date, some analysts worry that sales of Power PC-based machines could slow after the Intel-based ones start to roll out.

In the meantime, the company seems to be having trouble meeting holiday demand for its popular iPod nano, with many retailers outside of Apple reporting the device as being out of stock or back-ordered.

Steve Wallman, who runs his own eponymous hedge fund, is both an aficionado of Apple products and an investor in the company. While he's impressed with the transformation of the company under CEO Steve Jobs in recent years, he's concerned about the expectations that are now built into the stock -- comparing them to winning three Super Bowls in a row, a feat never achieved by any National Football League team.

After what Jobs has done so far, "you kind of give them the benefit of the doubt. But from an investment standpoint, it's not an easy hold at this price level," says Wallman, who is long Apple shares. "I certainly wouldn't be a buyer at this point."

But others, like Jim Grossman, a portfolio manager at Thrivent who is long Apple, feel that with this company -- and stock -- you've just got to believe. "At times, you've got to abandon traditional financial metrics and, for lack of better terms, drink the Kool-Aid," he says.

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