Apple has been trending higher since 2009 and has performed exceptionally well despite market conditions over the last month. AT&T is now trading near 52 week lows after its purchase of T-Mobile was declined. However the company is preparing for high volume with the arrival of the new iPhone 5 which could bring record sales.
Google is trading nearly 16% off its 52 week, high but with two high profile acquisitions and earnings that continuously impress I believe new highs could be fairly modest for this technology giant. Sprint is the wildcard of the four, after years of disappointing financial results it's hard to believe this company could nearly double to create 52 week highs. However the company will sell the iPhone 5 which I believe could change the direction of the company's stock. Below is a look at these 4 stocks and the reasons why I believe that each will create new highs in the near future.
Google Inc. (GOOG) has made all the right moves to positively affect the future of its company. The purchase of Motorola Mobility (MMI) gives the company much needed patents along with a handset manufacturer that Google could use to benefit in a more profitable way from its Android operating system. The company also acquired ZAGAT which should improve its search engine, mapping services, and any other business segment that Google may wish to improve. In addition to these acquisitions, which should positively affect future growth, Google is on pace to post full year earnings that significantly outperform its record year in 2010.
The five year income statement of Google show the company has increased its revenue year-over-year. The income statement for 2011 will most likely continue the trend as each quarter has been exceptionally strong. The company's profit margins have increased during the last 3 years despite the company spending such a high amount on research, acquisitions, and new business ventures. The company's balance sheet looks very similar to the income statement with assets increasing year-over-year and debt staying remarkably low, considering its fast growth.
The stock has trended lower during the market's recent sell-off because of economic uncertainty. The company jumped to prices over $600 after last quarter earnings report was announced. I expect for Google's upcoming earnings report to show the same level of growth and further more I expect the company to offer a significant amount of insight into its plan for Motorola Mobility and ZAGAT.
Both acquisitions are assumed to be a large part of the company's future. The company's full year earnings could very well send the stock to new all time highs, after the dust settles from the worried investors. Yet I believe that with a strong 3rd quarter along with some insight into its plan for the newly acquired companies, Google could trade very close to its 52 week highs during the weeks that follow Q3 earnings.
Apple (AAPL) has performed exceptionally well during the last month despite panic within the markets. The strength of this stock is a result of successful products and excitement surrounding its long awaited iPhone 5 product.
The income statement for the last 5 years show increased revenue and profit margins year-over-year. This year is expected to be no different as the company has posted impressive earnings for each quarter during 2011. The company's balance sheet reflects gains in assets year-over-year along with no debt. The strong fundamental performance of this company is one of the many reasons that this stock has performed so well during the last month despite a downtrend in the overall market.
The 3 month chart shows how fast the stock increased from $320 to over $400, which took place in just over a month. The stock has trended north since January of 2009 posting gains of nearly 320%. I expect the stock to continue posting gains with the company's new iPhone scheduled to arrive. I expect the stock to surpass its $404.50 price within the next two months and I place a one year target of $500.
I believe a $500 price target is likely, as the company will continue posting sales from the previous two iPhones, at a lower price, and sell record devices with Sprint contributing to the distribution of the iPhone 5. I believe that $500 is modest and easily achievable considering the company's growth, expectations, and price performance during the recent downtrend.
Sprint (S) should benefit from high sales of Apple's iPhone 5. In late August news was reported that the company would carry and sell Apple's new iPhone product. Sprint could be the latest of a long line of companies: Zagg Inc, OmniVision Technologies, Best Buy, AT&T, Verizon, among others to benefit from the success and demand of Apple iPhones.
The company has made no secret in saying that it's been hurt by not selling Apple products. But now the company has a fair chance against competitors by selling the number one brand in technology. I believe this news could be crucial to Sprint's financial health and its future within the industry.
The company's income statement has progressively gotten worse over the last 5 years, with 2011 on pace to continue its trend. Since 2007 the company has lost more than $7.5 billion in annual revenue along with its balance sheet being just as bad. Sprint has consistently increased its debt to asset ratio with higher costs and less revenue affecting the company's financial health.
Sprint has several financial issues which could take years to correct yet I believe its potential progress could be enough to post substantial gains in 2012. Sprint operates with too many locations that produce yearly loss and I expect the company to spend a large amount of cash on advertising to let the world know it sells the iPhone 5. Therefore, I do not believe the iPhone sells will be enough to achieve profitability, this year, but it should significantly increase revenue and improve the margins.
I have never been a strong supporter of Sprint Nextel Corporation but I do believe that iPhone sells will significantly increase revenue. I also believe the company has been at a strong disadvantage over the last several years by not selling the iPhones making it near impossible for the company to post a profit. I still believe it would be very difficult for the company to post a full year profit in 2012. But if the company were to show that it's improving then I believe investors will be more than willing to buy shares, and at $3.45 I see no reason that the stock could not surpass its 52 week high of $6.45.
AT&T (T) is currently trading near 52 week lows after news was announced that the T-Mobile purchase would not take place since the Justice Department believed the merger would lessen competition. However, the $12.5 billion the stock lost from its market cap seems a little excessive especially considering the company's performance over the last year.
Revenue in 2010 gained more than $1.7 billion with high sales from iPhones and Android phones leading the way. Its profit margin has significantly improved over the last 3 years with 2010 showing the highest margins during the 5 year period. The company has done a good job at lowering its debt to asset ratio over the last 3 years which is encouraging considering its expansion, new services, and amount spent on advertising and development. The company is on pace to continue its trend of revenue growth as the Android system continues to grow and the iPhone 5 sales are sure to impress.
The 2 year chart shows that AT&T has posted moderate gains since 2010 as the company's financials have improved. The recent loss has not been fundamentally driven it's been the result of widespread panic within the markets. Since the company is fundamentally improving and is most likely to finish the year strong with iPhone 5 sales I believe it's very likely the company could recover and surpass $32 by the first half of 2012. The stock also comes with a yield of 6.25 which offers growth, consistency, and security to investors during this time of uncertainty.