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Brian White with Topeka Capital Markets said in a note to investors on Tuesday that previous companies with market capitalization above $500 billion were already dominant in their markets. Apple, however, has a relatively small share of many markets where it competes, giving the company potential for even more growth.
"For example, Microsoft, held over 90% market share for PC operating systems at the peak cap, while Intel had over 80% of the PC processor market and Cisco had over 70% share in the networking market," White wrote. "On the other hand, IDC estimates Apple held just 4.7% of the PC market in (the first quarter of 2012) and 64.4% share in the mobile phone market in (the second quarter)."
Back in June, White dismissed a belief held by some on Wall Street that the $500 billion market cap would be a price barrier to further upside at Apple. Some investors theorized that the $500 billion market cap threshold was a "barrier" for stocks.
At the time, he analyzed five U.S.-based companies that at one time enjoyed market capitalizations of about $500 billion or more: Cisco Systems, Exxon-Mobile, General Electric, Intel and Microsoft. However, among that list, White found "little similarities with Apple."
In addition to what he called "monopoly-like market positions," the five previous $500-billion companies also had rich price-to-earnings ratios of over 60 times when they crossed the half-trillion-dollar threshold. In contrast, Apple is currently trading at just 10.7 times Topeka's calendar year 2013 earnings-per-share estimate.
White believes Apple's march to a trillion-dollar market cap will continue with anticipated product launches coming later this year, including a next-generation iPhone and a so-called "iPad mini." The analyst also believes Apple is planning to release a television set at some point in the future, and will also begin selling the iPhone through China Mobile, the largest mobile carrier in the world.
"We believe Apple is on a path to generate the highest annual net income of any publicly traded company ever by at least (calendar year 2013)," he wrote. Topeka Capital Markets has reiterated its 12-month price target of $1,111.00 for AAPL stock.