Apple is now being recognized as a consumer products maker that just happens to be great at technology, says Jim Cramer.
Apple hitting a $1 trillion market value reflects the company’s transition to being recognized as a consumer products maker that just happens to be great at technology, CNBC’s Jim Cramer said Thursday
To that end, Cramer said, Apple stock needs to trade at a higher price-earnings multiple, because 17 times year-end earnings estimates is too low.
He said Apple stock should trade at a higher multiple when looking at a best-in-class consumer products company like Clorox that has a PE of about 25 times.
« The market is struggling with how much to pay, but it knows it can’t pay this little given the fact this is a consumer products company, » Cramer told CNBC’s » Fast Money Halftime Report . »
« Should [Apple] get a 25 multiple like Clorox? I would think people would think that’s fanciful because the number is so high, » Cramer said. « So maybe we should put a 20 multiple [on Apple]. »
If Apple had a multiple of 20, that would put the stock price at around $242 per share.
When Apple hit $207.05 at around 11:48 a.m. ET, it went over the $1 trillion market cap threshold.
« I’ve been saying this is a consumer products [company] for some time, and people are starting to figure that out, » Cramer said.
The » Mad Money » host also praises Apple CEO Tim Cook, who took over in 2011 after co-founder Steve Jobs died, as « very underrated and very understated. »
« [Cook] believes that the product speaks for itself, not Steve Jobs and not Tim Cook, the product, » said Cramer, dismissing the criticism of Cook at times over the years as not being an innovator like Jobs.
« What Tim did and Tim does is say, ‘I will put out the best possible product. And will develop an ecosystem and that will develop a service revenue stream. But I won’t put out a product that isn’t any good,' » Cramer said.
