Is it o.k. to like Apple here?

By Money Matters Editors

 
Is it o.k. to like Apple (AAPL) at these price levels? Sure. Here’s why:

Look for FY2010 revenue growth of about 12-14%, slightly higher than FY2009 results, on increasing demand for Apple’s impressive suite of products.

The iPod should remain the U.S.’s state-of-art MP3/digital media player, and will continue to drive double-digit revenue gains at Apple’s iTunes store.

Meanwhile, the iPhone will continue to be the preferred smart phone among young adults: 13 million iPhones were sold from its June 2007 introduction to September 2008. Dozens of applications are being added daily, and although it won’t threaten BlackBerry’s (RIMM) business market, the iPhone will remain the industry standard in the residential consumer market.

Overall, Apple’s margins should remain in the 20-25 percent range in the next 2-3 years.

Further, there’s ample room for market share gains in Europe (5 percent of revenue) and Japan (19 percent), and the Americas (48 percent). In other words, Apple’s global footprint is extensive (70 countries) but by no means has the company reached its market limits.

Technically, Apple’s stock chart is strong – an uptrend that rarely touches the key, 50-day moving average – an indication that institutional investors (IIs) are continuing to add to their AAPL positions. Further, Apple recently broke through psychological resistance at $200, and a recent pull-back to about $190 represents a Buy opportunity.

With a P/E of about 29, Apple is not cheap, but given the company’s growth prospects, the risk/return is tipped decidedly toward a Buy.

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Disclosure: Money Matters Editors and staff do not own shares in stocks they review.