Think ahead to be ahead of the pack.. article from the street..
If we assume only an evolutionary upgrade to Apple's product portfolio it provides us with the following assumptions to build a forecast model: 20% annual revenue growth, 36% gross margins, a steady stock rise of $25/quarter, and 29% of profits re-allocated back into a stock buyback over the next ten years. If these four assumptions hold constant, the EPS projections look something like this...
If Apple continues to fund a similar buyback program over the next 10 years it will reduce the current float from 934 million shares to 419 million shares. As you can see, earnings growth combined with share reduction produces mind blowing results.
In 2022, Apple projects to earn $501/share. With a P/E of 10 that puts the stock at $5,000. We've all been warned about the law of large numbers but we haven't been alerted to its remedy. A massive buyback like the one Apple recently announced is that remedy. Settling into an annual revenue growth rate of 20% works out just fine if it's accompanied by such a program.
One of my thoughts is that Googles ad based revenue stream will run into major problems with devices like the iwatch and even its on glass project, who wants adverts on these devices? Googles revenue is roughly 30% from pc ads and 30% from mobile ads, pcs are doomed and mobile may go ad free if the ad free Apple model is the consumer choice.