Apple Bulls

Where does Apple stock go from here?

December 6, 2012: 5:00 AM ET

What was once a growth story is now a growth stock and a value play.

By Jon Birger, contributor

apple_stockFORTUNE -- I'm a nervous investor, so the notion of having all my money in any one stock is anathema. That said, I've owned some Apple (AAPL) for years. My "aha!" moment came when I replaced my old PC with a MacBook in 2009, and I've bought more shares since.

Three years ago, Apple was solely a growth story. Today it's both a growth stock (66% earnings growth over the prior four quarters) and a value play (1.8% dividend yield and a price/earnings ratio of 13, lower than the S&P 500's 16 P/E).

MORE: 15 top stock picks from star investors

The visionary founder may be gone, but iTunes and the App Store are increasingly locking users into the Apple ecosystem (bad for me the consumer, good for me the shareholder). Last summer there was much handwringing over the Samsung Galaxy SIII smartphone helping Android take the marketshare lead. But it turned out that consumers were waiting for the iPhone 5. By October -- after the iPhone 5 was launched -- Apple was back on top.

With the bad news behind it, Apple's P/E ratio deserves to be at least as high as the S&P 500's (SPX). Apply a 16 multiple to analysts' consensus earnings estimates for AAPL -- now $560 a share -- and you get a $789 stock. I'm not selling.

BACK TO: Why investors are right to be obsessed with Apple stock

This story is from the December 24, 2012 issue of Fortune.

  • Why you're right to be obsessed with Apple stock

    Loading up on the tech giant's shares has been a winning strategy.

    By Jon Birger, contributor

    FORTUNE -- Just thinking about Terry and Jeanne Gregory's portfolio can be a little scary. Retirees now living in Honolulu, the Gregorys have basically their entire life savings -- about $2.5 million -- invested in just one stock: Apple Inc.

    The Gregorys' love affair with Apple (AAPL) flouts every bit of investment advice doled out by MORE

    Dec 6, 2012 5:00 AM ET
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