Stock on Fire: How Apple Trades Into a Product Launch (Update 1)

Updated from 10:38 a.m. EST to reflect Apple becoming world's most valuable company in the seventh paragraph. NEW YORK ( TheStreet) -- Apple ( AAPL) is widely expected to announce a new iPhone and perhaps a new iPad next month. Historically, shares have run up into a product announcement, and it looks as if this time is no different.

Courtesy of Sanford Bernstein, above is a chart showing how Apple shares have done into a product release.

Sanford Bernstein analyst Toni Sacconaghi notes that shares of Apple outperform materially in the eight weeks prior to a new product's announcement date: "Average outperformance during this period has been 1100 basis points during previous iPhone launches." Sacconaghi rates Apple at an overweight with a $750 price target.

What We Know About the iPhone 5

Is Apple's product launch run done? Apple shares are up 24% in the past three months (twice the Nasdaq return) and touched a new all-time high during Monday morning trading, at $658.87. Over the past one month, Apple shares have gained 9%.

Given that Apple may also launch an iPad Mini, Sacchonaghi also provided data on how Apple has performed into the release of the tablet. Apple has outperformed by 900 basis points running into the launch of Apple's tablet.

After the announcement, shares of Apple have tended to remain flat, and even underperformed in the two months after a launch. Sacchonaghi believes this is because "the Apple blog-sphere has become increasingly effective and predictive, with major details of new products largely known before the announcement date."

Earlier Monday, Apple surpassed Microsoft ( MSFT) to become the world's most valuable company. Apple was worth $623 billion, besting the $620.58 billion Microsoft was worth at its peak in 1999, according to Standard & Poors.

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-- Written by Chris Ciaccia in New York

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