NEW YORK (TheStreet) -- Eyebrows raised on my scenario explaining how Apple (AAPL) stock could reach $800 per share. People called this notion loopy. Apple shares closed Thursday at $538.79, roughly 48% below my price target.
But is Apple at $800 a crazier prediction than the $1,250 per share target Carl Icahn believes the company can reach in two years?
Ask Cantor Fitzgerald analyst Brian White. While citing strong revenue growth from Apple's relationship with China Mobile (CHL), White issued a $777 price target on Apple shares back in January. When you consider that Apple stock has already appreciated 41% in the past 12 months, I don't see what's so crazy about the 40% to 50% rise that my price target calls for.
It's going to happen sooner than you think.
In Wall Street's quarter-to-quarter obsession with growth, the biggest concern with Apple today concerns where growth has gone. Accordingly, with the price-to-earnings ratio resting at 13, Apple no longer trades as a growth stock. By contrast, Google (GOOG) and Amazon (AMZN) carry multiples of 29 and 561, respectively. This means that investors are betting more on those companies' futures than they do on Apple's. It doesn't make sense.
Still unable to figure out Apple's next direction, the Street continues to take a wait-and-see attitude. Since the stock peaked at $705 in Sept. 2012, Apple shares are still at (relatively) depressed levels. While there's no denying that their competitors' products have caught up to Apple's iPhones and tablets, Apple is the only one making any money.
Apple sold 51 million iPhones in the first quarter. By contrast, BlackBerry (BBRY) sold 3.4 million. Even when you throw in Samsung (SSNLF), which is the market leader by volume, Apple has shown that it can still gain market share without sacrificing its margins.
Consumers continue to demonstrate their willingness to pay a premium for a distinguishable device. They value a product that stands out from the rest. This is how Apple plans to grow market share, and it can do this without dropping its prices. So although the playing field has supposedly been leveled, Apple is still the only one putting points on the board. And it's only just begun.
Analysts have yet to adjust their forecast models for the impact of China Mobile's 770 million subscribers on Apple's numbers. It doesn't seem as if they know about this new wrinkle. This includes Barclay's analyst Ben Reitzes, who downgraded the stock several weeks ago to "equal weight."
Given the strength of the iPhone 5S and upcoming iPhone 6, due out later this summer, talking points about Apple's margins will disappear. Plus, in February China Mobile said it added roughly 1 million iPhone subscribers, including 1.34 million 4G users.
China Mobile's numbers support data from research outfit Counterpoint, which released its worldwide smartphone survey for February. The report showed that Apple's iPhone 5S and the 5C were ranked first and second, respectively. Samsung took the next two spots with its Galaxy S4 and Note 3, taking third and fourth place. In fifth, Apple's iPhone 4S, which was launched three years ago. What does that tell you?
There is no evidence to suggest that Apple's dominance will slow any time soon. And even more important; the company continues its resurgence without cutting prices. Assuming that China Mobile sales remain at current pace, iPhone device sales can reasonably expect to improve by an additional 15 million to 18 million.
For now, with the stock trading at just 13-times earnings, Apple remains the best bargain on the market. On the basis of long-term, free-cash-flow growth, these shares are worth (at minimum) $650 by the end of the year. Assuming an accelerated buyback plan and a dividend increase, $800 per share in the next 12 months is certainly a realistic expectation.
At the time of publication, the author was long AAPL and held no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.