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Apple stock, at record high, has Exxon's market-cap crown in sight

September 16, 2010 |  6:12 pm

The Apple Inc. juggernaut rolls on: The company’s shares hit a new high Thursday ahead of the launch of the iPad tablet computer in China on Friday.

After struggling through the summer with the broader market, Apple stock has once again been tearing up the charts this month: The shares, which jumped $6.35, or 2.4%, to a record close of $276.57 on Thursday have had only one losing day in the last 14 trading sessions.

Look out, Exxon Mobil: After soaring 52% over the last 12 months alone, another 23% rise in Apple’s share price would make it the most valuable U.S. company by market capitalization, taking Exxon’s crown.

Exxon currently is worth $310.4 billion, a 13% drop over the last year. Apple is worth $252.6 billion. Market capitalization is a company’s stock price multiplied by the number of shares outstanding.

Iphone Apple already has overtaken Microsoft Corp., Berkshire Hathaway Inc. and Wal-Mart Stores Inc. this year to reach the No. 2 market-cap position, an amazing feat for a company that was worth $66 billion just four years ago.

Spectacular as its universally recognized suite of new products has been over the last decade, however, Apple now is facing rising competition from a host of well-financed rivals.

Smart phones running Google Inc.’s Android operating system already surpass Apple’s iPhone in the U.S., and Android now is gunning for iPad market share. Also, Amazon.com Inc. is taking fresh aim at the iPad in new ads for the Amazon Kindle reader. And Samsung Electronics' Galaxy tablet is on the way.

Yet Apple’s fans, who have become  accustomed to blockbuster growth year after year, show no fear that Apple's army of competitors will slow the company's pace anytime soon.

CNBC’s Jim Cramer this week called Apple “the greatest retailer on Earth” and lifted his price target for the shares to $325 from $300.

On Wall Street, earnings estimates for Apple keep rising: Analysts on average now expect the company to earn $17.62 a share in fiscal 2011 (which begins Oct. 1), up 21% from an estimated $14.51 this year. The 2011 figure has risen from about $15 a share in mid-April.

The stock’s price-to-earnings ratio is about 16 based on the 2011 estimate, compared with a P/E of about 12 for the Standard & Poor’s 500 index. But for a company with no debt and a mountain of cash, Apple arguable is cheaper than its P/E would suggest.

Eric Bleeker, financial editor at the Motley Fool, hopped the bandwagon for Apple this week, declaring the stock a buy “after years of skepticism.”

“Can a company worth $250 billion keep growing at outsized rates?” Bleeker asks -- and then proceeds to explain why it can.

But Fortune’s Scott Cendrowski reached the opposite conclusion in a piece he published earlier this week, arguing that at Apple’s current stock price there’s little margin for error if something goes wrong or the company simply fails to meet investors' lofty hopes.

“Apple is a great company and shows every sign of remaining that way,” Cendrowski writes. “But the company's underdog days are behind it, and now it faces a nemesis that can paralyze any stock: the tyranny of high expectations.”

Nothing Apple stock bulls haven’t heard -- and ignored -- many times over the last year.

-- Tom Petruno

Photo: The iPhone. Credit: EPA

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