by Scott Moser, CPA

Now that Apple, Inc. has become the most valuable company in the world, what is the prospect for future appreciation?  Shouldn’t investors unload their shares now that the Silicon Valley icon has reached the peak?  After all, every prior market leader has fallen from the pinnacle, including our own neighbor headquartered in Redmond, WA!

Apple stock has been one of the largest individual securities positions in our composite portfolio for at least the past five years. Given the current fundamentals of the company, buying Apple stock has been an easy call despite the lofty $500 per share valuation.

A recent dinner conversation with Meg’s daughter, (soon to be married and definitely concerned about future expenses) went something like this:  “Scott, now that my Apple stock has hit the $400 range, shouldn’t I sell it and bank my gains!?” My response: “What would you do with the proceeds? What business can you reinvest the proceeds in that has 20% of their market value in cash, is growing revenue at more than 20% (75% last quarter) with profits growing even faster? What business has consumers worldwide who are willing to buy their product as both a status symbol and a business productivity tool?”

It’s likely Apple will soon begin paying a dividend to disperse the massive cash hoard on their balance sheet.  This should open the door to additional investors like pension funds and non-profits that often avoid stocks that don’t pay a dividend.  And if the company is successful at creating an iTV device to simplify the control of America’s former favorite pastime, I have no doubt the stock could reach the $1,000 per share mark.  Revenue momentum from Apple’s current product line should keep sales humming along for the next 18 months and with just a couple of successful new product launches, the stock’s ascent should continue.  If a market correction does take a bite out of investors in 2012, Apple stock is one place I would be willing to wait out the turmoil.