UPDATE: Apple Shares Touch $600 Level For First Time

Apple Inc. (AAPL) shares briefly rose above $600 Thursday, the latest milestone in their meteoric climb as expectations build for the company's smartphone and tablet sales.

The stock has climbed consistently since re-crossing the $100 mark nearly three years ago, and it doesn't appear to be slowing as some see the stock surpassing $700 quickly. Investors are drawn to Apple because of the company's mind-boggling growth in sales and earnings, its $100 billion cash pile and the general popularity of devices like the iPad, the latest iteration of which is due to hit U.S. stores Friday.

Apple shares rose as high as $600.01 shortly after trading opened Thursday. The stock lost some steam later in the morning, turning negative for a time, and recently traded at $591.49, up $1.91. The first intraday trade above $600 comes 22 trading days after the shares first hit the $500 mark, a faster pace than the 32 sessions it took to go from $400 to $500.

Piper Jaffray analyst Gene Munster on Thursday raised his price target on the shares to $718 from $670, one of many analysts now expecting the stock to go past $700. Munster said his previous forecast gave Apple too little credit for "expected growth rates for the smartphone and tablet markets."

Some investors also see Apple shares hitting $700 soon. Among the trades on the options market Thursday was a bet the stock could soar above $720 by April 21. However, the largest single trade in Apple options was on the shares going above $660 by that date.

Overall, Apple's implied volatility--a measure of the market's expectation for stock swings based on option prices--jumped to the highest level since October, when the stock was trading at less than $400 a share.

"The valuation was woefully inexpensive," said David Rolfe, chief investment officer of Wedgewood Investment Partners, which owns about $150 million in Apple shares. "Now, even if the stock keeps up with earnings growth, it's going to be a fabulous performer."

Despite the rapid stock rise, Apple's price-to-earnings valuation--a widely used measure of how "expensive" a company's shares are--actually has declined because of the company's even more rapid earnings growth. While Apple's shares have doubled since October 2010, the company's earnings are expected to nearly triple between then and the end of Apple's fiscal year in September.

Morgan Stanley, in adding the stock Tuesday to its "best ideas" list, noted that Apple was trading at 13.2 times the current fiscal 2012 per-share earnings estimate. The firm said the multiple was below Apple's average over the past two years and "roughly in line with large-cap technology peers and the S&P 500, despite a far more attractive growth profile."

For example, the firm noted, Google Inc. (GOOG) and International Business Machines Corp. (IBM) have slightly higher valuations than Apple despite significantly lower expected growth rates.

Wedgewood's Rolfe said the Apple's key strength now is its "ecosystem," the software available exclusively on its products and the devices' ability to work in an interconnected fashion with other Apple gadgets.

People buying an Apple device are more likely to remain loyal to the brand because they can share their music, photos and other content on its other devices, he said. Among the risks for the shares is that as analysts' estimates have rocketed higher, the company will have a harder time beating expectations, Rolfe added.

"The biggest threat to the stock, I suppose, is just the law of large numbers--how long can this continue?" said Joseph Doyle, partner and portfolio manager at Morris Capital Partners, which owns Apple shares.

"In terms of the financial side of the thing and momentum for the foreseeable future, it's about keeping the trains running on time," Doyle added. "And that's what [Chief Executive] Tim Cook has shown he can do."

Along with its impressive sales momentum, Apple also boasts the largest cash hoard of any U.S. company. Its $97.6 billion in cash, equivalents and liquid investments as of Dec. 31 is nearly double that of runner-up Microsoft Corp. (MSFT), Moody's Investors Service said in a report this week. Apple alone accounted for 36% of the $179 billion increase in total corporate cash since 2009, Moody's said.

Speculation has mounted around what Apple might do with that liquidity, with many investors betting it will begin paying a dividend, which could also bolster its stock.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

--Kaitlyn Kiernan contributed to this report.

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