Investors saw Apple, Inc. (AAPL) and Amazon.com (AMZN) post stellar earnings, and as a result their stocks jumped significantly over the course of the following 24 hours. That being said, investors should consider both long term and short term strategies when trading both AAPL and AMZN.
Amazon.com- Shares surged Friday after Amazon reported a blowout quarter on April 26th. The upswing was driven heavily by better than expected sales of its Kindle Fire. Analysts were expecting AMZN to earn $0.07/share, however they blew past those numbers, coming in at $0.28/share. Kindle Fire, the primary catalyst behind the company's retail sales growth, lead all items sold, as 4.7 million units were sold during the quarter.
Analysis: Proceed with caution. In the short term, AMZN is a great buy, especially in the upcoming quarters. Analysts are expecting Amazon to earn $0.20/share on revenue of $12.82 billion during the June quarter. Those numbers are well within reach, except for the fact Amazon.com now relies solely on the performance of the Kindle Fire. If the number of Kindle Fire's sold in any of the next three quarters falls short, we could see just as much of down turn as we saw an upswing after the latest earnings report. If you are going to acquire a position, make it a small one and then buy or sell shares as news about the stock breaks.
Apple Inc. (AAPL) - Shares crept higher after the closing bell on Friday, due primarily in part to comments by Jefferies & Co.'s Peter Misek. He believes that an Apple television set could hit shelves by late Q3 or early Q4.
Analysis: Investors should try and shy away from all this Apple TV hype and focus on the nuts & bolts of what Apple has to offer. The stock is fantastic, and recent earnings have once again proven AAPL is a force to be reckoned with. Sales of iPhone and iPad toppled estimates and EPS beat by 22.5% ($12.30 actual vs. $10.04 estimate). The company also announced a share buyback plan and a regular dividend to be paid quarterly, after some investors were wondering about the cash stockpile Apple has accumulated. Currently trading with a P/E ratio of 14.69 AAPL is cheap by most standards; however the $610/share trading price may be out of the reach of some individual investors. I'd begin acquire small positions in the company, and as earnings and revenue growth progress, I'd buy additional shares in the company.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.