Apple’s Comeback Changes the World

A month ago, Apple (NASDAQ:AAPL) reported quarterly financial results that surprisingly missed analyst estimates and sent shares tumbling. Since then, shares of the tech giant have bounced back to new all-time highs of $680.87 this past week as Apple still remains the cream of the crop.

In July, the world’s most valuable brand reported weaker-than-expected earnings and revenue figures for only the second time in the past 39 quarters. As a result, shares dropped to $570 from $600 in a single trading day. Some thought the company’s core strength was going sour, but shares have rallied back as more speculation builds for new iGadgets. FBR Capital Markets’ Craig Berger recently explained that the next-generation iPhone, expected to be released this fall, will be a huge catalyst for Apple’s earnings. As long time Wall St. Cheat Sheet readers know, a ‘Catalyst for a Stock’s Movement’ is the ‘C’ in our CHEAT SHEET investing framework.

“We calculate that the device represents an opportunity to generate earnings of $50 per share throughout its life cycle,” Berger wrote in a research note. “We estimate that Apple should sell 250 million iPhone 5 units at an average ASP of $575, generating nearly $144 billion in revenue, $77 billion in gross profit, and $47 billion in net income.” The “iPhone 5 Tsunami” will also help the wireless industry as a whole, Berger wrote, adding that the device will “help the industry migrate to a better balance between content provider and end-user revenue sources to support continued investment.”

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On Monday, shares of Apple grew again to show off its crown as the most valuable company by market capitalization in history, well above Microsoft’s (NASDAQ:MSFT) peak value of $618.9 billion set in 1999 during the tech bubble. Apple shares reached as high as $680.87 in Monday morning trading, representing a 16 percent bounce from the recent low set the day following the weak earnings announcement. At Friday’s closing price of $665.24, Apple has a market cap of $623.60 billion, easily surpassing the runner-up Exxon Mobil (NYSE:XOM) with $402.97 billion.

While Apple is the clear winner in the tech sector, other recognizable names have not fared so well. Over the past three months, Hewlett-Packard (NYSE:HPQ) has been the worst performer in the Dow Jones Industrial Average, with a decline of 25.57 percent. Other Apple competitors such as Research in Motion (NASDAQ:RIMM) and Dell (NASDAQ:DELL) are among the biggest losers in the Nasdaq 100, with declines of 35.24 percent and 14.11 percent, respectively. Meanwhile, newcomers in the Internet boom such as Facebook (NASDAQ:FB) and Groupon (NASDAQ:GRPN) hit fresh all-time lows on Friday.

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