Now the iPad is here, what to do with Apple's stock?

Now the iPad is here, what to do with Apple's stock?

SAN FRANCISCO (MarketWatch) -- Apple Inc. stockholders like to bid up the company's shares before each new product unveiling, but the big gains follow in the months after the consumer devices hit store shelves, a review of Apple stock performance shows.

And with each new product launch, they are getting more bang for their buck.

That's good news for investors hoping the recently released iPad will extend the stock's run this year. But as with past launches, a lot depends on how the mass market picks up and adopts what's essentially a new type of media device.


Apple's /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 241.30, +1.35, +0.56%) stock rose 3% in the 17 days between unveiling the iPod in 2001 and its first sale, and 25% in the half-year after the devices hit store shelves.

In the six months between the iPhone announcement and its first sale, in 2007, Apple's shares gained 32%. Six months after that first sale, the stock had surged another 74%.

And in the roughly two months between the iPad unveiling and its first sale on Saturday, Apple's shares gained 14%. They've added about 2.3%, to $241.30, in the past week.

But does it make sense to bank on the company's performance just because of all the attention it gathers leading up to, and immediately after some of its major product releases?

Many on Wall Street seem to think so. The median price target for Apple's shares is currently $280. At least seven brokers see the stock topping the $300 mark - implying an additional upside of 25% for stock that has already doubled over the last 12 months.

Shaw Wu, a stock analyst at Kaufman Bros. who recently raised his 12-month price target to $295 a share, said that several things need to occur to make the iPad alone a reason to invest in Apple.

"You need content that takes advantage of the products," said Wu, who holds a buy rating on Apple. "With the iPod, it took the iTunes store. The iPhone has all its applications from the App Store. The iPad is brand new and needs a lot of specific content to really show off the hardware."

Patience required
Looking back at what are arguably Apple's two biggest hits of the last decade shows that even though some patience may be required, the company's products do have a track record of paying off for investors.

When Apple showed off its first iPod, which only held up to 1,000 songs, on Oct. 23, 2001, there had been few breakaway hits for the portable MP3 player market. Some analysts questioned just what Apple Computer, as it was then called, was doing getting into the music-player market.

A little more than two weeks after Chief Executive Steve Jobs showed off that first iPod, Apple's stock had risen just 28 cents a share, but within six months of the first sale, the shares had gained 25%.

Apple held a two-for-one stock split in February 2005 and prices prior to that are adjusted for the stock split.

source: marketwatch.com