NEW YORK, June 21 /PRNewswire/ -- Apple Inc. (AAPL: $274) has been picked by Standard & Poor's Equity Research as its Focus Stock of the Week. AAPL carries S&P's highest investment recommendation of 5-STARS, or Strong Buy.
"Over the last few years, Apple has transformed from the hip iPod maker to a leading-edge technology giant with a hand in some of the fastest-growing technology hardware markets," said Clyde Montevirgen, Information Technology Analyst at Standard & Poor's Equity Research. "By competing in the smartphone, laptop, tablet, and retail markets, and outperforming formidable competitors along the way, Apple has effectively expanded its total available market size and renewed its long-term high-growth potential."
Montevirgen thinks that investors with concerns about the sharp jump in Apple's stock price should look to the company's income statement to ease their minds. He notes that revenues have advanced at a compound annual growth rate (CAGR) of over 20% over the last decade due to its success with Mac computers, iPod media players and iTunes. Now that Apple has proven that it can have the same success in additional markets, Montevirgen forecasts a top-line CAGR of 27% from 2009 to 2012.
"We see earnings growing faster than sales," said Mr. Montevirgen. "Apple uses product refreshes and introductions, pricing strategies, and supply chain management to combat decreasing average selling prices and keep the cost of goods sold below that of sales. Gross margins have expanded from 26% in 1999 to nearly 42% in the most recent quarter ending March 2010. With its increasing mix of higher-margin products, such as MacBook laptops, iPhone handsets, and iPod Touch touchscreen media players, we see gross margins widening even further to the mid-40% range in coming years."
To view a video of Mr. Montevirgen discussing AAPL, paste the following link into your browser. http://link.delvenetworks.com/media/?mediaId=1a329f9e4d3c425a92c308501261eb5f&width=480&height=411&playerForm=DelvePlayer
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S&P Global STARS Distribution
In North America
As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services North America recommended 35.9% of issuers with buy recommendations, 52.8% with hold recommendations and 11.3% with sell recommendations.
As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services Europe recommended 37.9% of issuers with buy recommendations, 39.3% with hold recommendations and 22.8% with sell recommendations.
As of March 31, 2010 research analysts at Standard & Poor's Equity Research Services Asia recommended 42.9% of issuers with buy recommendations, 49.1% with hold recommendations and 8.0% with sell recommendations.
As of March 31, 2010, research analysts at Standard & Poor's Equity Research Services globally recommended 36.9% of issuers with buy recommendations, 50.1% with hold recommendations and 13.0% with sell recommendations.
5-STARS (Strong Buy): Total return is expected to outperform the total return of a relevant benchmark, by a wide margin over the coming 12 months, with shares rising in price on an absolute basis.
4-STARS (Buy): Total return is expected to outperform the total return of a relevant benchmark over the coming 12 months, with shares rising in price on an absolute basis.
3-STARS (Hold): Total return is expected to closely approximate the total return of a relevant benchmark over the coming 12 months, with shares generally rising in price on an absolute basis.
2-STARS (Sell): Total return is expected to underperform the total return of a relevant benchmark over the coming 12 months, and the share price is not anticipated to show a gain.
1-STARS (Strong Sell): Total return is expected to underperform the total return of a relevant benchmark by a wide margin over the coming 12 months, with shares falling in price on an absolute basis.
Relevant benchmarks: In North America, the relevant benchmark is the S&P 500 Index, in Europe and in Asia, the relevant benchmarks are generally the S&P Europe 350 Index and the S&P Asia 50 Index.
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