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October 23, 2014

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APPLE changes the way the market looks at stocks. Apple changes virtually everything they undertake. Now, it appears that APPLE has changed the way Wall Street looks at stocks. For way too long Wall Street has looked at so called momentum growth stocks as an opportunity to get in early and accept sky high PEs in favor of revenue increases. This year it appears Wall Street is beginning to change. It seemed to begin early in the year with Amazon stock taking big price drops when they issued a series of Quarterly reports with sales growth but anemic profits. The Janet Yellen questioned the valuations of some Biotech stocks and they went in the tank. Now this week we see Twitter unable to hold their stock price despite a 1 cent profit. The next day Facebook seemed to give good results but was also hit by the new view when they gave guidance that they would begin to increase expenses assumed to slow profits.
All the while the "presumed dead" APPLE (after Steve Jobs died) continued to press along simply amassing overseas cash, buying back stock, declaring dividends and in great secrecy improving and inventing products. All the news was bad as the analysts predicted the lack of a low priced phone, no new product lines and increased competition would make them a "value stock" at best. Stock price fell from $700 to $400. The PE fell to 9. Meanwhile the company continued to launch new versions of the i phone, improved the i Pad, provided schools with MACs. Launched in China and around the world. Improved security of it's data. The small almost insignificant Apple TV priced at $100 sold and sold. During the stock fall Google became the darling of analysts and Exxon replaced Apple as the world's largest market cap company. SAMSUNG the low cost competitor began to report declining profits. Then APPLE launched the i phone 6--no TV, no i watch but just the next version of another high end phone and APPLE soared. In preparation, Cook split the stock 7 for 1 leaving the price at $93. A few month's later the i phone is roaring and taking a huge share of the retail consumer's spending budget. MAC sales were up 5%. The i watch is on the front porch. APPLE pay designed to take advantage of the success of Apple's music business and it's millions of customer is dominating the news as analysts try to decide if it will work. It will and it will disrupt other's. It will open the door for Apple's moves into the Amazon and PAYPAL's markets. Apple already has partnerships with IBM,VISA, MASTERCARD,500 US Banks and now Alibaba.
APPLE has passed Exxon's market cap. GOOGLE and AMAZON are now in the side view mirror. APPLE's stock price is at $106 ($742 pre split) APPLE will soon take on BOSE. APPLE is cool. If you don't have an APPLE phone you are not connected and the new world of APPLE will not be yours.

SO, APPLE is making analysts and investors impatient. How long can AMAZON, TWITTER, FACEBOOK, KESSLER, Etc get away with returning zero to stockholders? Why would one hold them when APPLE gives you growth, earnings, dividends and buy backs? APPLE is proving that focus on quality solutions which give you higher margins and sticking to the knitting in an expanding world economy allows you to grow even if you are already the biggest.

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