Apple stock to grow faster than the economy, investor expects

• Apple briefly touched the $3 trillion market cap for two consecutive days

• Morgan Stanley raised Apple’s price target from $164 to $200 in December and maintained the equivalent of a buy rating

Apple Inc’s market capitalization is expected to “grow faster than the economy,” Patrick Armstrong, chief investment officer at Plurimi Group, said, arguing that the stock’s valuation is justified.

The International Monetary Fund (IMF) expects the U.S. economy to grow by 5.2% in 2022, while the global economy is seen expanding by 4.9%.

Although after his bullish statement, Armstrong on Tuesday told CNBC that he doesn’t think that “it’s going to be a stock that’s going to double very quickly.”

The iPhone maker on Monday briefly hit $3 trillion market capitalization after hitting the share price of $182.86.

However, on Tuesday, the share price fell more than 1% in the New York trading session, and the current market cap stands at $2.95 trillion.

Bullish stock

“Apple is an incredibly positive company in terms of cash flow generation, earnings, market share, profit margins. It’s almost ideal when you look at all of those metrics,” Armstrong told CNBC, arguing that the stock’s valuation is justified.

In August 2018, the Cupertino giant became the first publicly-traded U.S. company to hit a $1 trillion valuation, and after two years it reached $2trillion.

The market cap of Apple has tripled in less than four years.

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Microsoft Corp is valued at $2.46 trillion, while Amazon.com Inc is at $1.72 trillion, and Google-parent Alphabet Inc is at $1.92 trillion.

While some analysts have questioned whether Apple is overvalued, Armstrong told CNBC that the iPhone maker’s valuation isn’t as “lofty” as some other companies.

“It’s an incredible company trading at a premium multiple,” he said. “I don’t think there’s anything outlandish about that. I think great companies should trade at premium multiples. I don’t think you’re in the extreme lofty multiples that some of the other companies are.”

In early December, Morgan Stanley raised Apple’s price target from $164 to $200 and maintained the equivalent of a buy rating.

Following the updated rating, Los Angeles-based investment firm Wedbush Securities had forecasted that the company could hit the $3 trillion mark in 2022.

Bearish analysis

However, not every analyst and investor is as bullish on Apple right now.

On Tuesday, Emma Wall, head of investment analysis and research at Hargreaves Lansdown, told CNBC that now probably isn’t the time for investors to buy Apple or Tesla shares.

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“If you already have exposures to them, taking some gains, but keeping those exposures in a diversified portfolio, is no bad thing,” she said.

Picture Credit: Inkl