- Alcoa (AA) – While Alcoa sold off after a strong first quarter earnings report, the stock has rebounded off the $16 support level. Invisible to everyone, the forward curve for aluminum remains in contango while copper slides and investors stay focused on gold and silver. Demand for aluminum remains strong across the board. Aluminum’s light weight and durability is an ideal substitute for steel in cars and trucks.
- Qualcomm (QCOM) – Snapdragon chips are in more than half of the Android phones sold and Qualcomm owns a number of patents related to 3G which provide royalty revenues. The stock is literally at the center of the smart phone and tablet revolution. Qualcomm’s chips and patents are the gate that enables the social revolution on the Internet. Investors looking for a way to play the technological evolution happening in the tablet/smart phone sector should check out Qualcomm.
- Apple (AAPL) – The last three major product launches (iPod, iPhone and iPad) created and/or redefined their respective consumer product categories. The iPad has launched in China and India and last Friday the iPhone launched in India. Additional new iPad launches in the last month include Brazil, Argentina, Chile, Taiwan and Russia. iCloud service is set to launch shortly and the at current levels Apple’s stock is undervalued.
- Goldcorp (GG) – Penasquito is in full swing and additional projects are on track with the exception of a potential delay at Pueblo Viejo. The delay at the Pueblo Viejo JV with Barrick (ABX) is a minor setback but earnings will be strong this quarter and Goldcorp has a deep pipeline of projects which can easily be funded through existing cash flows. The stock sold off in May from the $56 level to around $47 and is rebounding to finish a hair under $50 last week. Far too much of a sell-off for a company which has more than doubled its dividend in the past year and is set to earn $3 per share in operating cash flow per share this year. By-product costs came in $100 per ounce under budget for the first quarter of 2011.
- U.S. Dollar Index (UUP) – A true contrarian investment. Yes the U.S. and the dollar have problems. Yes steps need to be taken to correct the problems, but are these problems greater or lesser than the problems facing Europe? The EU needs a weak euro to spur exports and economic growth in the PIIGS and a weak euro means a strong dollar.
- Euro – The strong euro is constraining attempts by the PIIGS to grow their economies. A weaker euro will help exports and allow domestic producers be more competitive. In addition, the euro makes up more than 55% of the U.S. dollar index so by default a weaker euro will mean a stronger dollar.
- Microsoft (MSFT) – While Office and Windows provide the bulk of Microsoft’s cash flow, the company has missed the smart phone and tablet revolutions. As the smart phone and tablet revolutions mature this has the possibility of slowing the enterprise replacement cycle as mobile professionals will likely tether their tablets and smart phones to the laptops/desktops in the office. In fact, recent data on laptops and desktops are showing a clear slowdown as sales growth turns negative. In Skype, Microsoft just paid 10x revenues for a breakeven company with $500 million in debt and technology already in-house.
- Nokia (NOK) – The leader in mobile phones has fallen on hard times and the confusing alignment with Microsoft is leaving investors baffled. Smart phone market share has fallen from to 26% from 41%. In the meantime, HTC and Apple are aggressively going after Nokia’s market share worldwide. The first Microsoft-Nokia phones will not ship in volume until late this year and they will have to be as groundbreaking as the iPhone if Nokia hopes to stop the bleeding. Shareholders will be wondering how long until Nokia pulls an HTC and switches to Android. Ask yourself, what is Nokia doing to defend its market share before the Windows phones arrive?