First Solar making a big move today, and is now up nearly 50% from its recent lows. More on the FSLR, $SPWR deal, as both stocks are up 15%+ today on news they are in advanced negotiations to form a joint YieldCo vehicle (the YieldCo) to which they each expect to contribute a portfolio of selected solar generation assets from their existing portfolio of assets. And $FSLR reports earnings tonight too. http://www.forbes.com/sites/uc…
I thought it’d be dead money while energy is down, but they are killing it lately with the $AAPL deal and now this Yieldco deal. Time to trim a little of my First Solar, about 1/6 or so of my position. Playbook, as usual, right?
Now onto today’s report.
Back in 2010, when Apple was trading for near $200 a share (the equivalent today to a 7-for-1 split adjusted $30), I wrote about my prediction that “Apple’s Going to $1000 by 2015. Here’s why.” Of course, I was mocked for making what was seemingly such an outrageous 300-400% move ahead for Apple stock over just a five year period, which meant that AAPL would need to make 50% annualized gains for my $1000 stock target to come to fruition. Taking my five year old $1000 price target for Apple and dividing it by seven to account for last year’s 7-for-1 stock split makes that a split-adjusted $142 price target.
Here’s one of my favorite mockeries of my 2010 prediction:
A more bullish point of view comes from Cody Willard, who predicts that Apple will trade for $1,000 a share by “2015 or so.” His argument is based on projections for “an installed customer base of 2 billion people using smart phones and the apps that run on them by the year 2020.”
That 2 billion figure seems quite high. It’s nearly one-third of the human race. If you eliminate children, the very old and the impoverished masses who don’t have fresh water or electricity, are there even 2 billion people left?
Even if there are, and even if every last one of them is destined to use a smart phone one day, Willard doesn’t seem to be taking into account the likelihood that phones and apps will generate far less revenue per unit than they do now. Gross overestimation of revenues helped create the tech bubble in the late 1990s, and reasoning like Willard’s may be inflating a bubble in Apple now.
I’ve been warning of the possibility that Apple’s stock is an accident waiting to happen. I’ve been wrong so far, although I’ve been closer to the mark in suggesting that Research in Motion (RIMM) offered lower-risk growth prospects. With a valuation that is barely more than half of Apple’s, Research in Motion still seems like the better, safer holding.
Apple is up 350% since that guy wrote that article for CBS News and is right now at $130 per share, within 9% of my five year old target. RIMM changed its stock symbol to BBRY and is down nearly 90% since then. Apple, which as he pointed out at the time, was worth less than two Blackberry’s is worth more than 100 Blackberry’s now.
So what to do with Apple now that we’re basically at my $1000 price target?
The chart has gone parabolic (again). The stock pulled back 10% the last time it went parabolic like this into year end. Still cheap as all get out and I still own it like I have for a dozen years now, but parabolic stock charts aren’t bullish.
If I were to hedge $AAPL, I’d use shorter-term, maybe 90 day puts as I’ve done at times in the past. However, I think AAPL could very well just consolidate around the $130 level rather than pullback 10% like it did last time the chart was parabolic like this, so I’m not buying puts on it to hedge it. I trimmed some AAPL near these levels a few days ago tho.
Finally, on a somewhat related note, is Google still headed to my 2010 prediction, Deal with it: Google’s going to $2000?
More on that tomorrow.