Why hasn't Apple the stock cooperated in this rising market?
Actually ... it did. Check this graph of the NASDAQ.
siliconinvestor.com
Now check this graph of AAPL.
siliconinvestor.com
Naz and AAPL both kicked off around April/May. Naz started forming a high water mark in October and has fallen into a flat sawtooth while AAPL started giving back in October. The guidance from management is very conservative. Sure, things look good, but there is nothing yet for an analyst to hang his hat on. The sector is coming back, but under intense price pressure. Personal computers have improved dramatically since 2000, but Joe Blow is not following the industry. They all look the same to him and he's already got one.
AAPL is giving back because there are more sellers than buyers. Over simplistic? Not really. Apple's small share of the computer market translates into small investor mindshare as well. The average AAPL investor also owns the computer, and might take money out of the market this time of year to feed the gifting urge. Without institutional accumulation activity, the stock flounders under low volume. Knowing that MacWorld is coming, momentum investors start biding it back up before the end of the year.
But I think the investor world is grossly underestimating the earnings momentum building here. Fastest or not, the G5 systems are selling. Big ticket. High margin. The G4 iBooks have to be flying off the shelves at $1499, too. While a smaller ticket price, the volume on the iPod is actually causing inflationary price pressure. And here's some antidotal evidence of Panther sales ... I liked it so much, I bought two more to give as Christmas gifts. It is one popular Cat!
The Apple Stores are doing their jobs well. You can actually walk into a brick and mortar retail establishment, fondle a Macintosh, and not have to explain to a clerk why you're not going after the, bland as a box of Band-Aids, canned by Intel, Windows MP. And, the stores are paying for themselves out of retail margins. Manufacturing margins are staying intact. Same store profits are increasing too.
Apple is also getting the most mileage out of their advertising with ample free publicity over the iTunes Music Store and its reach across platform lines. As good as publicity was this year, look for it to heat up five fold next year as the joint marketing campaigns with Pepsi and McDonalds ramp into high gear. It should be the kind of 'in your face' television spread that turns iTunes and Apple into COMMON household words. That has to be good for business with the mall stores open and eager to serve.
Plus, who knows what Steve Jobs is going to dazzle his audience with during his keynote address, but it's bound to be something. I hope it's along the lines of a G5 version of the iMac, but it's a little soon since they just introduced the 20" iMac G4. Unless ... the G4 line stays, drops in price, and the G5 iMacs come in at the current price points.
The only worry I see is the World Political Climate, and even that seems to be somewhat minimized.
Every now and then the Market gets it wrong for awhile giving the savvy investor the gift of a bargain entry point for a sustained climber. This looks like one of those gifts to me.
HerbVic |
