Investors usually get nervous when a company relies on the sales of one product. The exception is when that product is an Apple iPod. Just as consumers can't seem to get enough of the iPod, investors are foaming over companies having anything to do with the digital music player. It's the iPod economy. This week several Wall Street firms raised their price targets for iPod parent Apple, adding to a run-up that has boosted the stock 187% in 2004. It currently holds the title of the year's No. 1 stock in the Standard & Poor's 500 index. It's not just Apple. Stock in PortalPlayer, the company making some innards of the iPod, has been on fire in three days of trading since its initial public offering. Synaptics, which makes the iPod's trademark control wheel, is sporting a 152% gain this year. No one is uttering the "fad" word just yet. But some are beginning to worry that investors have gotten iGiddy. "Investors are getting gold fever here," says Phil Leigh, analyst at research firm Inside Digital Media. Consider: • Apple. The biggest and most obvious winner from the iPod's success has been its creator. And the frenzy continues. This week, Piper Jaffray analyst Gene Munster sent Apple's shares further into hyperdrive after slapping a $100 price target on the stock — nearly double his previous target. Tuesday, shares closed at $61.27. The trouble, though, is that 23% of Apple's revenue and most of its growth comes from the iPod, which makes some worry Apple is vulnerable if demand wanes. Still, Charlie Wolf, analyst at Needham, says not to worry. Happy iPod customers will soon buy matching Apple computers. "Apple is not a one-trick pony," he says. "But the market is treating it like it is." • Synaptics. If there's a company beyond Apple that's closely tied to the iPod, it's Synaptics. The company makes touch pads for the iPod dial. Synaptics won't break out iPod sales. However, Joe Sullivan at Craig-Hallum Capital says non-laptop sales, which include iPod, could be 40% of revenue by year's end. A spokeswoman at Synaptics says the company is not iPod-dependent, because it gets most of its revenue selling to laptop makers and also sells to iPod rivals, such as Creative, Olympus and Samsung. • PortalPlayer. It wouldn't be a speculative party unless there was an IPO involved. The iPod phenomenon qualifies. Friday, PortalPlayer shares soared 52% above their IPO price in one day and now are up 72%. Investors don't care that the company, which designs the computer chips that drive the iPod, lost money the past three years, says Francis Gaskins, editor of the IPOdesktop. Instead, they're looking at forecasts that sales of hard drive-based music players will grow 57% a year through 2008. "They're in a lake where the water is rising," he says. But, what if the water stops rising? "If that happens, then it's over," he says. Source: USA Today