2 Stocks That Have Outperformed Apple

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 |  Includes: AAPL, BBRY, EXPE, GOOG, PCLN, QCOM, TXN
by: Top Economic Articles

It sounds unimaginable that any one stock has outperformed Apple (NASDAQ:AAPL), but it is true. In fact, we have identified two, one that outperformed Apple in the short-term (two years), and another that outperforms Apple in the long-term (18 years).

The stock that outperformed Apple in the short-term (over two years) is Priceline.com, a leader in global online traveling services. The company offers its customers, anything from airline tickets, to hotel reservations, car rentals, and vacation packages, replacing the need for traditional travel agencies.

Priceline.com (NASDAQ:PCLN) has three advantages over Expedia.com (EXPE), and other online agencies. First, a first-mover advantage that gives the company a better recognition among travelers. Second, long relations with travel service providers. Third, economies of networking, the benefits associated with more people using certain online services. These advantages have been paying-off as the company has been reported stellar financial results. The company's operating margin is close to that of Apple.

Company

Recent Price ($)

PE*

Operating Margin (%)

Quarterly Revenue Growth (%)

Apple

542

10.76

25.8

73.30

Priceline.com

654

19.34

23.59

45

Qualcomm

63

15.32

34.40

39.80

Click to enlarge

Forward Dec. 31, 2013

Source: Compiled from Yahoo.finance.com

The stock that has outperformed Apple in the long-term (over 18 years) is Qualcomm (NASDAQ:QCOM), an innovator and leader in CDMA-based integrated circuits and Radio Frequency (RF) and Power Management (PM) chips and system software that power mobile devices and wireless networks. The company is in a better position to ride the exploding market for mobile devices than its closest competitor, Texas Instruments (NASDAQ:TXN), which reported disappointing results recently.

Qualcomm maintains leadership in wireless communications, which is still an emerging industry. Wireless Intelligence estimates that the number of 3G users will reach 2.8 billion by 2014. The company is expected to be the main beneficiary of the wireless communication upgrade cycle. The GSM Association expects telecom providers to spend $100 billion by 2015 -in High-Speed Packet Access (HSPA), 3G, and 4G. Qualcomm has also been reporting superior results-actually the company enjoys better operating margins than Apple.

Why Have Priceline.com And Qualcomm Outperformed Apple?
For Priceline.com, we have two answers. First, because of a statistical aberration, since the period is so short. Second, this period coincides with the time when there was a great deal of anxiety over leadership transition at Apple.

For Qualcomm, the answer is that the company faces little competition in its core business, and has benefited from the growth of the entire mobile market. In other words, Qualcomm gains no matter who dominates the market for mobile devices. This isn't the case for Apple, however, which was facing competition from Research in Motion (RIMM) in the early days, and from Google (GOOG) these days.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.