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Fear & Greed Trader
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INDEPENDENT Financial Advisor / Professional Investor- with over 30 years of navigating the Stock market's "fear and greed" cycles that challenge the average investor. Investment strategies that combine Theory, Practice and Experience to produce Portfolios focused on achieving positive... More
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RTR LLC
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Stocks4Income.com
  • Apple Update 9/11 - Still Keeping It Simple ! 10 comments
    Sep 11, 2013 3:20 PM | about stocks: AAPL

    As anticipated, AAPL shares came under pressure upon the recent new product announcement. This has been the case for the last few product announcements, as investors bid up the shares going into the event, then , "sell on the news" .

    However the weakness that the shares are presenting today as many research firms downgraded the stock is a bit overdone. Most were "disappointed " with the products and the pricing structure..

    Negative views on the company are everywhere. Criticism is now overwhelming and many are ignoring any of the "good" news that is present in this "story"

    When I first recommended AAPL , I suggested to "keep it simple", and keeping with that theme, I will present the factors that suggest the sell off today is a buying opportunity.

    Hers is what really matters - margins & earnings. And here is what I heard yesterday .

    Apple is keeping its three product, three price point strategy, but instead of moving the iPhone 5 down to ~$500 wholesale as would normally be the case, it is replacing it with the 5C, which I believe will serve the dual purpose of moving demand up from the low end and improving gross margins.

    Totally lost in the conversation today is the fact that NTT DoCoMo (Japan) is adding the iPhone, which will add approx. 10 million units to the bottom line. That will indeed add to future EPS increases.

    Along with the Japan deal , it seems that most analysts have either written off or forgotten the China Mobile deal. I am of the opinion that the deal with China will be struck before the year is out. The addition of that market will have the analysts scrambling to once again upgrade their estimates and price targets. More than likely the same group of analysts that are downgrading the stock today !

    Also lost in th hysteria, is that earning estimates are now increasing for the first time in a year. With the stock now trading back down to the $460 level , the risk /reward becomes compelling. For the next couple of years, Apple's current product portfolio should lead to high-single-digit top line growth, and with modest margin expansion and buybacks, double-digit EPS growth.

    Lets not forget Mr.Icahns position in the company , which in my opinion puts pressure to continue stock buybacks and dividend increases in the future.

    Below is a "weekly" chart indicating that double bottom @ $390, where we last purchased the shares . http://seekingalpha.com/instablog/706857-fear-greedtrader/2012882-apple-revisited-keeping-it-simple

    (click to enlarge)

    There would appear to be support in the uptrending 20 week MA @ $450. While the "daily" chart (not displayed) indicates support somewhere in the $460 level.

    Conclusion: Take advantage of the "fear" that is on display with the sell off. While I may wait another day or so to see exactly how much selling may be left , I do believe we will get that support somewhere in the $450- $460 area. For those that have not participated or others that may wish to add, it would be wise to start nibbling on any additional weakness. That action will be rewarded as I suggest we can see a price of $650 sometime late next year as the story plays out ..

    All of the articles regarding Apple are on display here in this blog.

    Disclosure: I am long AAPL.

    Additional disclosure: I am long numerous equity positions (list can be seen here in this blog) I am short Gold via DZZ

    Themes: Apple- Keep it Simple Stocks: AAPL
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Comments (10)
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  • Krustyman
    , contributor
    Comments (825) | Send Message
     
    Agreed! :-)

     

    NTT DoCoMo and China Mobile + the next wave of products (ie iwatch, itv and iwallet) are totally ignored by the investing community. Hmmm, let's take advantage of this! ;-)

     

    Cheers!

     

    Krusty
    11 Sep 2013, 03:52 PM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4091) | Send Message
     
    Author’s reply » Krusty,

     

    I'm going to add to my position in the next day or so, I do see a good risk/reward set up here .
    11 Sep 2013, 05:35 PM Reply Like
  • ClintH
    , contributor
    Comments (95) | Send Message
     
    I could not agree more. People were so desperate to see Apple join the "Race to the bottom of the hill of profits" like Dell or HP have mistakenly done over the past decade. Apple made a surprising run at a new emerging market of consumers called KIDS. What they realized in the past 2 years with declining ipod sales was that parents are buying their kids phones instead of ipods. Seeing that this is the largest growing segment of the phone industry, Apple decided to market kids with the iphone 5C... it was never meant for China... it was meant for Children. Tethering kids to Apple products means generations of loyal consumers. Great Strategy.
    12 Sep 2013, 08:51 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4091) | Send Message
     
    Author’s reply » Clint,,

     

    Interesting and insightful commentary.. supports the view that the 'analysts" do have it "wrong"

     

    Thanks
    12 Sep 2013, 08:56 AM Reply Like
  • Krustyman
    , contributor
    Comments (825) | Send Message
     
    It is also surprising that nobody on the Street seems to have noted the new Itunes Radio. Seems a real winner to me. How will they monetize it?

     

    Follow the link:

     

    http://bit.ly/18SQvoJ
    12 Sep 2013, 09:02 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4091) | Send Message
     
    Author’s reply » Krusty.

     

    Thanks for the info ,, I have to admit I wasn't aware of that either ! Good stuff ! I have to give them the benefit of the doubt on how to monetize,,

     

    As an example I was a doubter on FB and their "monetization" issues, until a friend convinced to buy when it was beaten down to the mid 20's.. I am now a lucky believer -- LOL
    12 Sep 2013, 09:06 AM Reply Like
  • Krustyman
    , contributor
    Comments (825) | Send Message
     
    Lucky you, Fear&Greed! I was so close to buy FB when it was in the 20's but never pull the trigger. We can't have them all! :-)
    12 Sep 2013, 09:19 AM Reply Like
  • Fear & Greed Trader
    , contributor
    Comments (4091) | Send Message
     
    Author’s reply » Krusty,

     

    Forgot to congratulate you on your earlier call on the solar sector a while back,, Hope you did well with that call it was "spot on " !
    12 Sep 2013, 09:38 AM Reply Like
  • Krustyman
    , contributor
    Comments (825) | Send Message
     
    Thanks Fear&Gread! ;-) TAN performs really well.
    12 Sep 2013, 11:28 AM Reply Like
  • maykiljil
    , contributor
    Comments (306) | Send Message
     
    Thanks. Very good article. I liked it.
    12 Sep 2013, 12:10 PM Reply Like
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