Displaying items by tag: Apple
Barron’s has featured a very eye-opening call. The argument comes from the CIO of Ariel Investments. She argues that it is time to short Apple. Referring to the company as the “blue chip of yesterday”, she contends that Apple is not a tech company, but a consumer electronics one, and that whether its new products are a hit has a huge impact on revenue. It is trying to pivot to services, but it has no first mover’s or any other natural advantage in doing so and is competing with big names like Netflix and Disney. It is even behind competitors in its core iPhone business and trying to catch up. She argues that a blue chip of yesterday is the worst kind of stock because all the good news is priced in, but none of the bad news is.
FINSUM: This is quite a stark portrayal of Apple. While we do not completely agree, there is some significant truth to this argument and it warrants concern.
In a move that seems highly in contrast to its nature (or at least its “old” nature), Goldman Sachs is changing the way it reports its earnings as part of an effort to be more transparent. The bank is not doing this because of some general high-mindedness, but rather so that investors can better grasp the progress it is making in its various divisions, including in consumer finance. That area includes its new consumer savings and online lending unit—Marcus—as well as its new credit card venture with Apple.
FINSUM: This seems like a smart play and we could see this as a catalyst for Goldman to break out of its long-term stock stagnation.
Value stocks have been in the doldrums forever. Growth stocks have been outcompeting for many years. One way to get some good performance is to stay away from value stocks as a whole, and instead focus on individual names. Here are some stocks that look cheap and have positive catalysts in the cards (from Bernstein Research): Hewlett Packard, Apple, Tyson Foods, UnitedHealth Group, Cigna, Anthem, Nielsen Holdings, Delta Airlines, and United Airlines.
FINSUM: Apple as a value stock seems rather questionable but we get the “mispriced because of how great its earnings are” logic. The airlines seem an interesting bet to us.
Apple has been on an absolute tear lately. All the bearishness which preceded the newest iPhone launch set the company up for a great run. The stock is up a mind boggling 65% this year. To put that $450 bn of value appreciation in perspective, it is equivalent to adding the market caps of SalesForce, IBM, and SAP on top of what Apple already was at the end of 2018. So where does it go from here? The thing is, Apple usually continues a big upswing after an iPhone launch, so history is on its side right now.
FINSUM: iPhone sales may continue to surprise to the upside but the medium- to long-term question is whether investors will buy into Apple’s pivot into credit cards, gaming, and streaming.
A few weeks ago we were feeling very bearish about the new iPhone and suggested that we thought Apple’s stock might fall. However, we must now admit that we have had a change of heart. The incredibly poor sentiment that preceded the new iPhone’s release has been replaced with cautious optimism. Reviews of the newest suite of phones have been more positive than expected and this replacement cycle seems likely to be significantly better than previously expected. That, combined with the fact that Apple is not staggering release dates of the models this year, means that the stock could see some significant gains.
FINSUM: Everything seemed very gloomy prior to the new iPhone’s release, but that was the perfect environment for an upside surprise.