Why Apple Shares Remain a Bargain Despite Reaching New Highs

NEW YORK (TheStreet) -- Shares of Apple (AAPL) continued their incredible run Monday, closing at $95.97, up more than 2% during the trading session.

Apple stock is now up 20% on the year to date and are up almost 30% since the end of April. Even more remarkable, since reaching its (split-adjusted) 52-week low of $55.55 last June, Apple stock has surged more than 73%.

Investors who've taken the leap of faith during all of last year's doom and gloom have done well. The repeated trumpeting of Samsung (SSNLF) and Google (GOOG) killing off Apple has been muzzled. But with as much as 73% gains on the line, investors are getting nervous, which is understandable. But it's not time to lose faith.

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As Apple shares demonstrated Monday, this momentum has only begun to pick up steam. With Apple in the midst of a $130 billion capital redeployment plan, which it expects to complete by the end of 2015, there is plenty of room for the share price to run in the next 18 months. That's assuming CEO Tim Cook doesn't surprise investors with another dividend and/or share buyback increase.

The other thing is, despite the recent surge in share price, there is plenty of pent-up demand for the stock. While citing data from Morgan Stanley, a Forbes article noted that Apple's institutional ownership remains underweight when compared to other large-cap companies in the S&P 500. Analysts aren't citing this. But let's not pretend this important tidbit is not material to their bullishness.

This means that investors who are still waiting for a better entry point are doing so at their own peril. Once the institutions begin to pile into the stock, as I suspect is happening already, shares are poised to break their pre-split all-time high of $705 (or $101).

Apple, which received yet another price target increase on Monday, appears revived. While citing higher-than-expected iPhone 6 sales during the third quarter, Analyst Andy Hargreaves at Pacific Crest raised his price target on Apple from $93 to $100.

Apple shareholders rejoiced. I've echoed these sentiments on numerous Apple commentary. But Hargreaves is playing it too safe. From Monday's closing price, this new target represents only a 4% premium. The way I see it, Hargreaves is avoiding a limb that doesn't exists. Not to mention, he's late to the party.

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