Apple shares fell 23 points in European markets overnight on news CEO Steve Jobs is taking another medical leave, but the stock rallied throughout the day and reached new highs thanks to positive earnings results reported after Tuesday's closing bell.
The action, Cramer said, is "amazing" because the stock typically sells off after reporting strong earnings. Apple beat Cramer's "wild high" estimate of $6 by as much as 43 cents, yet the stock is now trading higher than where it was before Jobs announced his leave of absence.
Selling at 14 times earnings, Cramer called Apple's stock "dirt cheap." He thinks it should be higher, especially given its "incredible" earnings results. Yet, some investors don't think the company deserves its $300 billion market cap and worry about how it will do without Jobs at the helm. Cramer, however, remains bullish on AAPL.
"Apple is bigger than one man, even if that one man is part Thomas Alva Edison when it comes to inventing, part Henry Ford when it comes to manufacturing and part Sam Walton when it comes to building a retail empire," Cramer said. "Jobs has built a deep bench and even without him, nothing can stand in the way of this incredible growth company."
As Apple shares struggled in early trading, Cramer used the weakness to raise his price target on the stock to $400 from $325. For some time, Cramer had been waiting to raise his target, but it took the Jobs announcement to create the buying opportunity.
There are, Cramer said, many reasons to get behind Apple. First of all, chief operating officer Tim Cook is fully capable of leading the company in Jobs' absence. After all, he served as interim CEO during Jobs' last leave in Jan. 2009. The stock lost 5 percent when it was announced Jobs would take leave, but in the six months under Cook, the would rally by 60 percent.
The Cupertino, Calif.-based company has also become so dominant, it has created an "ecosystem" that more and more people are inhabiting. With Apple, it not only creates the device, but everything to go with it. Its operating system is made by Apple. Content is downloaded off Apple's iTunes or the App Store.
Apple is like a rain forest, Cramer said, because everything grows there. Its competitors, on the other hand, are like the desolate Gobi desert. Not much growth to speak of, he said.
Given Cramer thinks Apple could earn $23 a share this year, his price target of $400 is relatively conservative. Without the $55 of cash per share on the balance sheet, Apple at $400 would sell for 15 times 2011 earnings. Not bad considering Amazon trades at 53 times next year's earnings while Google trades at roughly 19 times earnings. Even a retailer, like Target , is more expensive being as it trades at 14 times forward earnings.
"With or without Steve Jobs, Apple is taking over the world and that's why I'm raising my price target for Apple to $400," Cramer said. "Hallelujah. Never seen anything like it."
When this story was published, Cramer's charitable trust owned Apple.
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