After Icahn announced his big investment in NFLX, the stock rose within nine months to trade at a price-to-book-value ratio of 15. A similar rise for Apple would propel its stock to $2000. Highly unlikely.
After Icahn announced his big investment in NFLX, the stock jumped within nine months to a price-to-sales ratio of 4. If AAPL jumps to a price-to-sales ratio of 4, it will be trading at $750. Hmmm. Maybe.
Icahn says that if Apple uses the cash in its coffers to increase the size of its planned stock buyback, that action alone will cause AAPL to rise to $625 per share. Sounds reasonable, as leveraged cash is certainly worth more than idle cash.While Icahn's announcement certainly served as an effective catalyst to propel AAPL upward through the stiff $475 resistance level, the stock had already been in the midst of a strong month-long upswing. What had been happening prior to that, for months, was that AAPL had stopped trading like a technology stock and started trading instead like a retailer stock. This is perfectly understandable, in light of the fact that Apple hasn't had any major new product launches since the iPad three years ago -- and there have even been no minor product launches since last year. So Apple had for nearly a year settled into being merely a retailer of existing products, and its stock-price was punished, dropping to trade for months in a zone at or below a P/E of 10. That is all expected to end soon, with a rumored Sept. 10 media event to launch its next-generation iPhone 5s and a cheaper iPhone 5c to capture market share in lower price-ranges. Also expected to be released soon are new versions of Apple's iOS and Mac OS X operating systems and a bold redesign of its Mac Pro desktop computer. Long-shot products thought to be in development include an iWatch wearable computer and an Apple television. >>5 New Trades From Renaissance Technologies I have closely watched and frequently traded AAPL for years. Short-term, I expect AAPL to be an excellent trading stock. From an investment perspective, I suspect it would be wise to initiate a small position here at the $500 level. Based on past experience and the charts, I would expect AAPL to pull back to re-test the $489-level and perhaps even the $475level, but there is of course no guarantee that will happen. Will there be over the long-term an Icahn Effect that by itself will propel Apple's stock to astronomical levels? That remains to be seen.
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