UPDATE: LEAD IMAGE IS AAPL 5-8-18. TECHNICAL TREND REVERSAL CONFIRMATION $181.72. UPTURNED MACDs. Chaikin Money Flow has moved into positive territory. AAPL’s now too expensive, trading at or near its’ 52 week high. Long term investors should wait for better prices, at least 3% lower.
AS WE WORKED TO FINISH THIS PIECE AAPL STEPPED UP 2.2% BEFORE 9:00. AAPL closed up 3.93% at $183.83. As you will note lower, the upside technical level to breach was $181.72. Did we all miss it? No. Apple’s not going away. Nor is wise long term investing. What’s their beta again?
Apple’s spilled more verbiage than the Bible. Apple’s made nearly as much money too. Like God, Apple has been dead dozens of times. Like Lazarus it’s risen every time. Sick of the volatility? Looking for secular growth, growth you can live with when the sun goes down? With market turmoil comes a search for refuge. The “defensive” sector displays few opportunities, for income at a reasonable price or any price stability. STOCKjAW looks elsewhere for peace and growth. Really, it’s been there right in front of our noses. Now with a fabulous 1.49% dividend yo, and growing–and more money than god.
Volatility
makes nearly everyone nervous. Some say “it won’t go away.” Some say the VIX will average a 20 this year. That means swings up or down equal to 1%. So we’re looking.
So the markets see-saw and everyone’s talking tense and Mark goes up on the hill to testify and earnings start rolling in and no one cares. Not to forget the repeated beatings we’ve just talken. What’s left? Apple, Boeing, Facebook, Home Deport, Twitter maybe, and all the ones you know.
Investors never cease to amaze us in the companies they find. Looking for stability, strength, and growth? Frankly, no real search is necessary beyond one of these. Apple, Boeing, and Facebook.
But is Facebook safe? When’s Boeing’s share price going to find solid support? Is Apple China-Kill, or maybe just slowing? Are they investable?
Is anyone else sick of the rhythmic “bug out” warnings by the stock intelligentsia? “Facebook–Sky could fall.” Could’ve. Didn’t. Nothing fundamental changed, except the share price promptly spiked. SJ’s playing it different next time. Buffet got it right, and didn’t pay a penny for “protection.”
We believed. We missed a $13 move. SJ conclusion; consuming serious media is always an accumulated skills endeavor. We knew FB was a bargain, yet sold in the face of fear. Scandal and issue risk are real, and FB’s story is not over. So, is that long term investing?
Market disruption nearly always creates opportunity. Good companies stick out when the water recedes. Now is no different. Oops, except that stability, growth, dominance, are all worth more now. Or is that just us?
STOCKjAW looks to strength and dominant industry positioning. I’t not just the volatility talking. It’s also management, scale, established base, customer loyalty, dominance, revenue….
For anyone familiar with our portfolio page knows we position for secular long term growth. We seek the leaders of disruption, or dominant players. Volatility changes nothing in that focus. Three names stand out for us now.
Apple, Facebook, and Boeing offer the long term investor stunning strength, stability, industry dominance, and amazing growth potential. Want more? Here it is. They’re all affordable. Oops, I meant to say cheap–for AAPL.
Valuation metrics.
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Does it make sense that the richest company on the planet sells at a 40% discount to the average? Well, no. Does it matter that AAPL has an installed membership of 270 million, while Amazon just announced 100 million Prime Members? AMZN is amazing, but AAPL’s base is 2.7X larger?(SJGraphic.)
Is this the same Apple, or an even better Apple? Who knew? Millions knew. Will investor’s value the visibility and stability of a service stream? What about if that service stream comprises greater than 50% of a monstrously huge and constant revenue stream you can depend on?
AAPL(05-04-18).
- AAPL’s technical position is mixed yet improving. Up/Down volume shows shares are under accumulation. Momentum indicators suggest a trend reversal. A close above $181.72 would add confirmation of positive reversal. And the stock’s trading at a 40% discount to the S&P. Figure that out. By the way, it’s only 2.3% above the high last November. As we write Buffet purchased another huge chunk of AAPL–*Friday, 5-4-18.
Friday’s move means waiting for better prices. Nothing new here. We will be closely tracking AAPL, learning as much as possible in the meanwhile. How hard is that?
5-4-18: Friday’s Apple move into the technical zone.
- What a difference a Warren makes–or a day. Friday provided the technical “confirmation” hoped for in AAPL’s case. Check the massive leap over the 50 day SMA. MACDs up. The price move came on 11.7% higher 5 day volume. Not huge. Going forward Apple will be bucking the “law of large numbers.”
AAPL $176.89. Morningstar target $175.00. Div. 1.39%.
BA $330.69. Morningstar target 309.00.00. Div. 2.07%.
FB $174.02. Morningstar target $198.00. No div.
Target prices are nice. Maybe, but target prices rank low in any real evaluation of these dominant players. Do you care about target prices when you realize in the very near future Apple will be receiving half of revenue in recurring service fashion?
And do targets matter when thumbing through Boeing’s 10-year order book? And really, do target prices or even possible regulation, scare you away from a 51% revenue growth rate at Facebook?
Management Effectiveness metrics.
When the wind blows a giant bag of money helps. Ask Apple. So Ask them about service revenue visibility, and a 99% customer loyalty rating. That’s on an installed base of 270 million. Digest that. Don’t forget the $100 share buyback authorization, with oodles of cash left over. EU taxes are a bee sting. Forget about it.
When your order book has no room to grow, it’s called a very high-quality problem. That’s Boeing. Forget about Airbus. Wasn’t it the last massive Paris Air Show where Airbus booked no orders for their spec-built A380? Really? Anyone get fired over that?
And China? Cramer simply suggested that more than enough airlines want Boeing, more than they can handle. And growth? No way BA grows like Facebook, even with FB’s bag of possible headwinds. But then, how many people saw this last run?
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