How Long Can Apple (AAPL) Continue at This Pace?

Today, shares of Apple (Nasdaq: AAPL) are once again breaking records. Apple's stock price went as high as $196.83 today, marking a new 52-week (and all-time) high. On a year-to-date basis, Apple has returned over 130% to loyal investors, and, more recently, after the brief tech-wide pullback in mid-November, shares of Apple were under $160, moving up by almost 30% in under a month.

With such drastic gains in a $170 billion company, it would seem Apple's momentum has to be tapering off... sometime. On the other hand, Apple could still be standing at the base of what could be a very large mountain.

In the past, Apple has been a "one-hit wonder" type company and didn't feel a very large scale following until the iPod was released in 2001. Apple is only now starting to diversify its product base and explore alternate ways to make money - besides computers.

Apples newest product, the iPhone, has seen sales rocket to over 1 million units in just over two months. Accordingly, Apple expects to sell over 10 million iPhones by the end of next year. Hows that for momentum?

At Apple's Macworld event next month in San Francisco, the Company is expected to unveil a new ultra-portable laptop, possibly broadening its share of the personal computing market. The laptop is rumored to be about 50% smaller than the current version of the Macbook Pro, with a 12-inch screen. This will likely strengthen Apple's hold in the computer industry, which also has recently seen dramatic gains. Analysts at RBC Capital expect holiday Mac sales to be massive: about 2.4 million shipped during the first quarter, up 9% from the record 2.2 million Macs in the fourth quarter. On a year-over-year basis, RBC expects Apple to announce a 47% increase in Mac sales. Additionally, the firm expects the Mac's U.S. market share to rise from 7.2% to 9.3% and its global market share to rise from 3.1% to 3.7% in 2008.

In order to sell all these new products, Apple is now making retail sales locations another top priority. Apple now has over 200 stores worldwide in 5 countries and plans to open 40 more stores in 2008, including one in China. Apple's retail locations, which last quarter made the Company about $1.25 billion, are not your average store, though. In fact, Apples new store in downtown Manhattan is being called "the model for consumer electronics retail." At these stores, Apple is introducing new innovations, such as handheld scanners that register purchases around the store, rather than having customers wait in line, in order to change the retail environment.

So, from a fundamental stand-point, Apple is currently firing on all cylinders, and appears that it will continue to do so. It doesn't seem that sell-side analysts will be backing away from the stock either: Bear Stearns recently raised its price target on Apple from $243 to $249 and Caris & Co. raised its target from $215 to $225.

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