Apple Inc. (Nasdaq:AAPL)
- Will Apple Inc. (NASDAQ: AAPL) Keep Driving Technology ETFs Higher?
- The Antitrust Curse: What Apple (NASDAQ: AAPL) Can Learn From Microsoft, IBM
- Is Apple Stock (Nasdaq: AAPL) the Short of a Lifetime or the New Widow Maker?
- Tech Stocks Soar on "Off the Charts" Demand for Apple Inc.'s (Nasdaq: AAPL) Products
- How Apple Investors Can Profit from the New iPad
- A New Way to Play Apple Stock
- The Three Innovations That Will Make Apple Inc. (Nasdaq: AAPL) the First $1 Trillion Company
- What Apple is Signaling about a Market Top
- Apple Inc. (Nasdaq:AAPL): When to Buy the World's Hottest Stock
Apple's astonishing rise has also helped to underpin the Nasdaq Composite, which gained nearly 19% in the first quarter -- its strongest showing since 1991.
But that's not the only place to experience the "Apple Effect."
Many investors who own technology ETFs -- which hold almost 4% of all Apple shares outstanding -- were rewarded with even better returns.
For instance, theVanguard Information Technology ETF (NYSE: VGT) was up 20.85% in the first quarter.
Even better, the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW), was up 21.77%, thanks in part to Apple.
Now the question is: Can Apple's momentum continue to drive technology ETFs higher?
The DOJ accused Apple of colluding with several major publishers to fix the prices of electronic books in its iBookstore.
The evidence was strong enough that three of the five book publishers settled before the DOJ filed the suit. Two, Macmillan and the Pearson PLC (NYSE ADR: PSO) Penguin Group, decided to fight the charges along with Apple.
The antitrust case itself poses little threat to Apple. With $100 billion in the bank, it can afford to fight government lawyers until doomsday.
Even losing the case wouldn't make much of a dent in Apple's pocketbook. The three publishers that settled paid a combined $51 million, hardly a concern to a company that earns an average of $120 million every day in profits.
Likewise, a remedy that forces Apple to lower prices for e-books in its iBookstore would have almost no impact on earnings. Nearly all of Apple's profits come from sales of high-margin hardware like the iPhone and iPad. Profits from all iTunes Store segments, which include the far more voluminous sales of apps and music, account for less than 4% of Apple's profits.
And yet this antitrust suit poses the biggest threat Apple has faced in years, as former tech kings Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM) can attest.
"This echoes back to the peak in Microsoft," Sean Udall, author of Minyanville's TechStrat Report, said in a Yahoo! Finance interview. "Microsoft had a monopoly and was doing great and was the star tech stock of yesteryear. And you can almost draw the peak of their stock when they had major DOJ issues."
The problem with being in the DOJ's gunsight is that it distracts management, makes the company hesitant to innovate, and blemishes the company's public image.
While antitrust woes may not have been entirely responsible for Microsoft and IBM ceding their dominant positions in tech, they were clearly a major factor.
And worse for Apple, the e-book case could be just the beginning.
I believe Apple stock (Nasdaq: AAPL) is going to be world's first trillion-dollar company yet I want to short the snot out of it.
Am I being compulsive?...impulsive?....or foolish?
Perhaps it is all three considering that Apple has risen more than 3,000% in the last ten years, turning almost any attempt to go against the grain into a "widow maker" trade.
I say almost because I am one of the lucky ones.
A few weeks ago I recommended my Strike Force subscribers purchase put options on Apple, effectively shorting the stock. That resulted in a 47% profit in less than 24 hours for anyone who followed along, excluding fees and commissions.
I'm not alone in my thinking.
Uber investor Doug Kass, general partner of Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP, tweeted recently that he had covered "half his short" on Apple following the announcement of their dividend and buyback plan.
Given that the stock had run up to nearly $608 a share before the announcement, presumably Kass had banked some gains, too.
With demand for Apple Inc.'s (Nasdaq: AAPL) products soaring, tech stocks will continue to do well.
Tech stocks have posted a whopping 16% return in 2012, the top performing sector in the Standard & Poor's 500 index. By comparison, the broader market has notched just a 9% gain year-to-date (YTD).
"Large-cap technology stocks have exceeded our expectations with better revenues, earnings, margins and cash flows," Michael Sansoterra, a sub-adviser for the Ridgeworth Large Cap Growth Fund, told The Wall Street Journal. "You just can't find that elsewhere in the large-cap growth space."
Tech Stocks Offer BargainsEven as they march higher, prices for tech stocks are a relative bargain.
If the third version of Apple's trend-setting tablet is as big a success as most expect, then owning the company's stock isn't the only way that Apple investors can profit. Many of Apple's suppliers will also reap reward from the New iPad.
The New iPad's marquee features, such as support for 4G LTE networks and the ultra-high resolution Retina display, should help Apple maintain its dominance in the tablet market at least through the end of the year. And if rumors of a 7-inch iPad Mini eventually pan out, Apple will have a cheaper tablet option to appeal to consumers now buying Amazon.com's (Nasdaq: AMZN) $199 Kindle Fire.
A Forrester Research report published yesterday (Tuesday) put the iPad's share of the tablet market at 73%, with no other rival having more than 5%.
Analyst estimates for 2012 iPad sales range from 55 million to 60 million. Apple has sold 55 million iPads since the product's debut in April 2010, winning over not just consumers but multiple markets.
"It's astonishing how fast the product has spread through business, education and health care," Needham & Co. analyst Charles Wolf told USA Today.
Sales of the iPad, along with the iPhone, have pleased Apple investors by pushing stock past $500 a share this year.
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And I believe it will in a relatively short order - but it won't be easy.
Apple took the most valuable company crown from Exxon Mobil Corp. (NYSE: XOM) in January after stunning December quarter results sent the stock soaring. Yesterday (Wednesday), AAPL's market cap crossed $500 billion.
As Apple's valuation has climbed, fueled by a five-year average annual growth rate of 59%, more people have started throwing the t-word around - as in trillion.
"Apple's a no-brainer to me to hit a $1 trillion-dollar market cap within the next year," James Altucher, managing director of Formula Capital, said on CNBC's "Fast Money" recently.
The record for market cap is just over $650 billion, achieved briefly by Microsoft Corp. (Nasdaq: MSFT) at the peak of the dotcom bubble in early 2000.
Only a handful of companies have made it to the $500 billion club, and membership has been fleeting.
The list includes Cisco Systems Inc. (Nasdaq: CSCO), Intel Corp. (Nasdaq: INTC) and General Electric Co. (NYSE: GE) - all during the 1999-2000 market peak. The last company to breach the $500 billion mark was Exxon Mobil in 1997.
One factor in Apple's favor is that it has risen to its current lofty levels not riding a bubble but despite a recession. And the markets for its existing products, such as the iPhone, the iPad and the Mac, still have room to grow.
"The reason Apple has been able to continue growing at a spectacular rate, even as its revenue base has surpassed $100 billion, is because it targets the world's biggest markets," Robert Cihra, an analyst at Evercore Partners, told The New York Times. "The simple fact is that they still have a small share of huge markets - single-digit shares in both PCs and mobile phones."
Naturally, getting to $1,000 a share and a $1 trillion market cap will require the addition of new sources of revenue, as well as sustaining growth in existing markets.
However, Apple already has head start with at least three cutting edge innovations...
by Guest Author by AlbertarocksGlobal Economic Intersection Article of the Week
When a general stops leading his army mass surrender usually soon follows. Very often when an index begins to lose leadership from its general the entire complex soon finds itself in big trouble. If there was ever an index that had a singular more important hard-core heavyweight leader than the Nasdaq 100 has in AAPL, I’d like to know what index that was. AAPL now makes up a full 17% of the market capitalization of the entire $NDX. So obviously when an enormous corporation like AAPL starts to take a bit of a bruising, it behooves us to take a real close look at what’s going on. (Click on picture for larger image of apple face.)
Follow up:The enormity of the effect that AAPL has on the entire $NDX can’t be overstated. Only last April its weighting had been reduced from 22% to 12%. Today, only 10 months later, that weighting has made another astonishing burst back up to 17%. The only other heavy hitters in any index that I’m aware of which even comes close to having the weighting that AAPL has, are Simons Property Group which makes up approximately 10% of IYR (real estate ETF) and IBM which makes up about 12% of the DOW. With a market cap. of $446 billion, AAPL is now slightly greater than twice the size of IBM. The bank account? With $98 billion cash on hand, AAPL now sports a cushion 6 times that of IBM. If AAPL really wanted to buy something nice they could certainly afford it. May I suggest Greece?
Before we dive in, just a few notes for clarification. I don't mean to insult anyone here, but it has come to my attention that there are some people whose eyes glaze over when dealing with a chart that is made up from a ratio. There's nothing to it really. In fact, all currency crosses are the same thing... just a ratio:
a) When viewing ‘any’ ratio chart, think of it as a ‘leadership gauge’. In all cases, what we’re really doing is dividing the component on the left side of the ratio (the ‘numerator’), by the component on the right side. In this particular instance, AAPL is the 'numerator' and is 'the component being judged' for leadership and not the Nasdaq. But of course the ultimate goal of any division operation is to generate the "quotient". It answers the question "How many AAPLs can we buy with one unit of NDX?" We then put that quotient on the chart in the form of the ratio itself... the candlesticks. What we're really after is to reveal what the ratio is doing and what it means for the broader index itself. The purpose of this study is not to discern when to buy or sell AAPL, but the NAS.
b) In order to improve the ‘viewability’ of a ratio-style chart, I’ve changed the way I display them from the method I used to employ, in order to make them far less "busy".. Rather than to overlay the two individual comparators behind the ratio itself, I’ve placed them in the upper section of the chart in separate panels so that they appear as individual line charts. But the all-important ratio, the subject of our focus, is still shown in the heart of the chart as candlesticks. In every ratio chart, any indicators that are displayed pertain to the ratio itself and not to either of its components.
Again, I apologize to those who already understand how ratios charts work, but out of respect for our friends who have been a bit reluctant to admit they didn't know, I just wanted to offer that bit of clarification. We start by taking a look below at the weekly chart of the ratio between Apple and $NDX:
The hottest stock on the Nasdaq has fallen more than 4.6% as I write this since hitting a new intraday high of $526.29 on February 15, 2012.
Does that mean it's time to sell?
Perhaps, but first you should ask yourself why.
If you're a long-term investor, there's a lot to look forward to. Apple is much more than a brand; it's a lifestyle. People tattoo the company's iconic brand on their rear ends for crying out loud.
Always the innovator, Apple has barely scratched the surface with regard to new devices and has hardly tapped into ways to use them.
People line up thousands-deep to buy newer versions of the company's most basic products every year -whether they need them or not.
That is something no other tech company has figured out how to do.
Plus Apple's market share is growing overseas, with a particular emphasis on the Asian Rim.
In China alone, for instance, there's the potential for another 30-50 million iPhone sales in the next 12 months that could add another $4-6 in EPS to Apple's bottom line.
I remain convinced that Apple could be the world's first trillion-dollar company and I'm not alone in my thinking. Since I first voiced that highly controversial opinion a few years ago, many other firms and analysts have joined me.
How to Play the Short-Term Apple TopBut in the short term, Apple's chart now looks like a classic blow-off top- and technically speaking it is.
Last Wednesday, we saw the stock close near the lows of the day after making a quick run up and a high volume, hi-speed failure midday.
The chart tells the story.
Take a look