My take on AAPL and the recent market moves
July 24, 2009
– Comments (5) |
RELATED TICKERS: AAPL
, PM
I'm neither long nor short AAPL right now. But I recently read that because of its recent big jump on earnings that you "may want to wait for a pullback" before buying in.
That's bad advice. I remember when AAPL was 66 a few years ago. By the time I funded my IRA to get some free cash to invest, 3 days later, it had moved to 70, a nearly 8% jump. I figured I'd wait for a pullback to $66 before I bought.
A year later it was trading at $214. Never did touch 66, or 70, or 80 again during that time, just blew by those handles on the way up.
AAPL is a fine company. Fortress balance sheet, no debt, smartest tech and management employees in Silly Valley, and I personally love their products. The reason I don't own it is because their stock price is all about retail investor sentiment and that is a tough investment thesis to make money on. The question isn't "Is AAPL a great company," it's "Can Joe Retail Investor be persuaded to love AAPL any more this week?" Hard question to answer.
The market has rocketed on ahead this past week, on better than expected earnings from a few names. The stocks in my portfolio have done considerably better than the averages, and here's their traits that they share in common:
1) No exposure to the American consumer. We're heading into a recovery with a jobless rate of 15% of the workforce. This is going to be a jobless recovery - housing starts are still at century lows - and cons. disc., resi mortgage, and anything that touches it are going to feel pain for some time to come.
2) Rest-of-world exposure. The entire world's modern economy is starting to decouple from the American consumer. This is a result of explicit choices that management teams and governments are making worldwide. Keep your eye on it: choose companies, ceteris paribus, where 50% or more of revenues either come from overseas or are predicted to. This isn't a coming trend- it's happening already.
3) Regulatory risk. Divest yourself of regulatory risk. God and Congress alone know what's going to happen to American healthcare, American infrastructure, American tobacco, American resi, comm and student debt, and everything else touched by the regulatory finger of the US Gov't. Unless you think you're smart enough to pick winners and losers in the political game, just divest yourself.
4) Dividend yield. There are some fortress blue chip stocks out there yielding upwards of 6% and building revenues like champs.
You want a name? OK, I'll give you my name for the next 5 years: PM. Even at today's price it checks off on all of the above. And all that currency stuff you read about - it's a wash. Long-term, currency variations even out, but that said, PM is a weak-dollar play, less of a strong-dollar play. The only reason I don't buy more is that I ran out of capital.
What do you like this week, Fool™?
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