Apple is the Most Valuable Company of All Time – Sort Of

by Jordan Richardson on August 21, 2012

On Monday, Apple Inc. saw its stock surge to new highs yet again to close at $655.15 a share. That’s up 2.63 percent from Friday’s closing price.

The company’s value is now $624 billion, making it the highest ever by any company – sort of. It beat the record previously set by Microsoft when the Internet was still booming. That peak was $620.58 billion, without inflation of course. If inflation is considered, Microsoft had a worth of $850 billion in December of 1999. Now, the company sits at $257 billion.

Apple is now worth 54 percent more than the second most valuable company on the planet, Exxon Mobil Corp.

Apple’s stock has been surging lately in large part due to the expectations around iPhone 5. Few other companies have built as much rapport around impending releases as Apple, with a marketing company unlike anything the modern age has ever seen. Their ability to generate excitement about unreleased, unknown products has largely built the foundation for Apple’s surreal success.

The interesting thing about Apple is that its stock is not relatively expensive in contrast to the company’s earnings profile over the last year. Their price-to-earnings ratio is 15.6, which compares rather starkly to Microsoft’s 83 price-to-earnings ratio in 1999.

Last summer, some investors sold off stock after sales of iPhones slowed up somewhat while consumers waited for a new model. Those investors missed a 50 percent rise in the company’s stock prices, so they likely won’t make that mistake again. “This time around, investors are a little bit smarter across the board…they don’t want to be caught not involved in the stock on this next iPhone launch,” Wedbush Morgan analyst Scott Sutherland said.

Out of the Standard & Poor’s 500 index, Apple makes up 4.7 percent of its value. That means that it appears in a good chunk of investment portfolios and will likely make even more appearances as the company’s fortunes continue to rise. Word of a mini version of the iPad should generate even more interest and even more investors.

And analysts still think there’s room to grow, of course. According to 38 analysts polled by FactSet, the average price target anticipated for Apple’s stock is $745.80. It’s doubtful that things will level off from there, with a seemingly endless stream of products and a seemingly endless stream of consumers game to lap up everything and anything the Cupertino company puts out on the market.

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