The Fantasy Football season is approaching and all of sports geeks on the planet will soon dive head first into our magazines, spreadsheets and YouTube videos of players we have never heard of in hopes of finding that diamond in the rough that takes us to the championship game. Thankfully I found a brilliant way to talk about the upcoming football season while still having the conversation be relevant to SA readers - I am going to compare stocks to various football players and their future success this season/year.
For this first article I will focus on the quarterbacks, I mean tech stocks.
Microsoft Corporation (MSFT) - Old reliable is the most popular computer operating system on the planet. It is a staple of the business world and has done its job consistently for a considerable amount of time. Windows 95 was a breakthrough in technology - the problem is we haven't seen much change ...until now. Windows8 looks beautiful and still has the guts to do the work for the business world. I just installed it on my PC last night and was happy to see that not only was I able to enjoy the Metro UI, I could access the "old UI" with a touch of a button.
Anyway how does all this relate to fantasy football? IF you never tried to understand fantasy football just think of Microsoft as Peyton Manning. Peyton Manning produced as the QB for the Indianapolis Colts for many years. Sometimes Peyton was the top QB but more often than not he was in the top 3 for the position, very reliable and seldom spectacular. Like MSFT if you had invested in Peyton Manning many years ago you would be sitting pretty today. This season is completely different (WIN8); Peyton is on the Broncos with a new offense and a new receiving corps. Expect there to be bumps in the road and make sure not to buy high, I have him rated outside of the top 5.
Google Inc. (GOOG) - When I think of GOOG I think about how great it does email, search and maps. After that I think about the insightful YouTube acquisition and questionable Google+ project. It seems as if for every one thing GOOG does great it does another thing horribly wrong. Google reminds me a lot of Michael Vick - dynamic, running ability like no other and a developing passing game. Vick does have his issues, durability being the major concern and character issues the other.
Michael Vick has the ability to win you a fantasy football title on his own, IF he can stay healthy and out of jail. Google probably could take over the entire tech world if it could stop shooting itself in the foot with questionable products and leveraged its strengths more. I am unwilling to bet my fantasy season on Vick with a first or second round pick but if he were to fall to the mid-3rd round I would have to consider taking him, the upside is just so great.
Facebook, Inc. (FB) - The new guy on the block has been overhyped by everyone (I'm looking at you bankers & media). A 55+ billion dollar market cap for a company earning $1B in revenues leaves no room for error and that is pretty much where we find the top pick in this year's draft Andrew Luck.
The replacement for Peyton Manning in Indianapolis has been as promoted as the most complete NFL ready QB coming out of college EVER. The Luck hype, like the FB hype before him will prove to be too much as the stock and the player settle down into reality. FB has 800+M users that it can monetize further in some way and Luck has Reggie Wayne to throw the ball to. Facebook at 38 bucks was a bad idea as is Luck in the first 6 rounds of your draft, stay clear until either makes you believe their current valuations are justified.
Apple Inc. (AAPL) - Year over Year quarterly earnings growth of 94%. For a small company this is a great feat but something we have all seen in our time, but for a mega cap to grow earnings the way AAPL has done over the past few years is nothing short of remarkable. Apple has completely dominated the tech world and all it has is a forward earnings multiple of 10.5x to show for it.
Greatness has not been recognized by the market with current valuations and that is why Cam Newton is Apple. Cam Newton had the best year for a rookie QB in NFL HISTORY. Along Cam's run to the record books people doubted his ability to keep it up for a whole season, and now that he has the pundits are saying he can't do it for a second season. The comparisons are eerily similar and yet the market continues to undervalue them both. Cam Newton should be the top overall pick in fantasy football as should Apple be the largest stock in your portfolio.
I had a very hard time finding a player to which I could compare Amazon.com Inc. (AMZN). I could not find a top 10QB that was as relatively overvalued as Amazon stock is right now.
I hope you enjoyed this article and look forward to reading my RB preview as much as I look forward to writing it.
Disclosure: I am long AAPL.
Additional disclosure: I am also long Cam Newton via a keeper league.