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Apple Shares Show Strength After Steve Jobs Death


It's a sad truth, but few public figures get to go out on top. The annals of sports history are filled with tails of late-career trades that see legends playing their final season in a different uniform. Rare is the movie star who doesn't have at least a few duds on their resume. And unique is the rock band that doesn't get outdated before they give up. That is not the case for Steve Jobs and the dynasty he created, Apple Inc. (AAPL).

Sure the stock has had a tough couple of weeks, shedding 10% which is more than $30 billion of market value. But here is what investors need to keep in mind: This decline is from an all-time high that was hit in late September, while many other stocks were setting new lows. It is still way too early to pass judgment on Jobs' successor, Tim Cook, who is just 6 weeks into his tenure as CEO, but honest analysts will concede the best he could hope to achieve is to not screw it up. Bottom line, nobody could fill Steve Jobs' shoes.

If you're worried and wondering whether to adjust your Apple holdings, know that analyst support for the stock and belief in its earnings ability have not waned one bit, and I would be surprised to see Jobs' passing result in any negative revisions for the foreseeable future.

As of today, 96% of analysts covering the stock have a "buy" rating with a median price target of $500 a share. That means 48 out of the 50 analysts who cover the stock recommend buying it and see it growing by about 35% over the next year. If they're right, Apple could be the first company to have a half-trillion dollar market cap, up from its current $350 billion value today.

The projected ascent is predicated on earnings growth, which is reliant on sales, which is dependent on continued strong consumer demand for Apple's lineup of sleek iProducts. Interestingly, just two days ago the latest product launch received lukewarm reviews after Apple unveiled the new iPhone 4S, instead of an officially enumerated 5th generation of their top selling smartphone.

Are there challenges ahead for the iPhone? You bet. But they were there and acknowledged long before the company's founder stepped down on August 24th. An order by Sprint (S) for 30 million iPhones is just one small point suggesting demand will defy economics for at least a while longer.

Similar headwinds face the iPad. But keep in mind, the company's category crushing tablet is very early in the product cycle and already commands a 75% marketshare. Furthermore, Steve Jobs (and his hand-picked and highly respected stable of talent) are already 2 or 3 or 4 generations ahead in their iPad planning. And who knows, there might even be a trove of DaVinci-like drawings or notes left behind by Jobs to inspire and guide those who have been left to carry the creative torch forward.

For now, the biggest technology company in the world has a lot going for it: Tons of cash, a stable full of top selling products, a fanatically loyal global customer base, a world of opportunity for expansion, and at least a few quarters of almost assuredly good earnings.

All of which makes Apple a continued target to its rivals who want nothing more than to eat Apple's lunch. The company faces a new lawsuit of some variety almost everyday, and faces the stark reality of change in the technology sector where obsolescence comes quicker than anywhere else.

Steve Jobs was the king of inventing new products that people didn't even know they wanted. Replacing that speed will be the real challenge for the new Apple. But for now, and at least for another year or two, the old Apple is here to stay.

Are you buying, selling, or hanging onto your shares of Apple? Let us know in the comment section below.