Another Apple blowout

Above: my favorite logarithmic chart (and my favorite stock), which alert readers will recognize is the source for my blog's favicon.

Once again, Apple earnings have exceeded expectations by some 20-25%, sending the stock up almost 7% in after-market trading, and delivering a blow to those who, fearing a less-than-spectacular earnings report, sold AAPL in the past week or so.

I'd like to think this is one more example of how pessimism has been the norm. Investors have been very reluctant to believe that the U.S. economy can avoid another recession, and reluctant to believe that Apple can continue to post above-average growth. Yet Apple's profits are up 94% in the past year, and even after today's after-market gains, Apple's PE ratio is still only about average. This market still doesn't believe the good times can last.

Apple is also a good example of why corporate profits are at record levels relative to U.S. GDP, but only about average relative to global GDP. The reason? Successful companies can address a global market that is orders of magnitude larger today than it was just 10 years ago. Apple can sell millions of iPhones and iPads every few days, and still have only a relatively small share of the potential global market for smartphones and tablets.

If Apple can come up with just one more unique product this year—and Tim Cook today referred to at least one more to come this year—then there is little reason to think that AAPL is anything but cheap at today's price of $600.

Full disclosure: I am long AAPL at the time of this writing.