Remember the bad times (and earnings updates)
Do you remember the last time you were scared? Do you remember the last time you wondered to yourself, “When will stocks ever go up again?” Think about those times right now. Trim some down if you’ve been aggressive in your long positioning or if you were scared when stocks were selling off a couple weeks ago. Think about the hard, scary, brutal sell-offs while markets are at all-time highs. I’ll remind you to remember the great, euphoric, wealth-building stock markets the next time we get a panic and stocks are down. Steady as she goes as you follow the playbook, right? No place for emotions when it comes to our money, except to use other people’s emotions to our portfolio’s advantage.
I’m working on an updated Cody’s Latest Positions and updated ratings for each position right now and will have it out later today or tomorrow.
We’ve had several Revolution Investing companies report earnings in the last couple weeks, so let’s jump in and update our analysis on those that have.
Apple – The earnings report was very strong and the company sold some 61 million iPhones. The Apple bears now hang their hats on saying that Apple is a “one product company” or a “one trick pony,” but the Apple bears have always been shortsighted. First of all, I don’t care how a company that I bought when it had an entire market cap of less than $10 billion that now generates $19 billion in cash over a 90 day period. Second of all, did they miss how hot the Apple Watch already is and car displays and other future products in the Apple eco-system are going to be? Apple can’t stay up with supply and on Ebay right now, this very minute, Apple Watches are going for 2-4x their retail price. Apple’s biggest problem is meeting demand. That’s been the case since the advent of the first iPod, the first iPhone, the first iPad and now the first Apple Watch. And speaking of the Apple Watch, I’m waiting for a delivery of mine soon, and this feedback, from a 77 year-old TradingWithCody subscriber who got his Apple Watch last week makes it hard to wait another minute for one of my own:
“Hi Cody,
Apple as always delivers fantastic service. I received the Apple Watch on Friday and also received an email from them setting up an appointment to review the watch and functions for Monday. I have never received the kind of support that Apple is providing me on the Apple Watch. There are so many functions to learn, that it is taking a little time, but it is well worth the investment. I worked my way through prior to the phone call, however this fellow who contacted me answered many questions regarding how to’s and also showed me some neat applications for the watch.
So far I have mainly used the watch to make and answer calls, utilized Siri which is very easy and right on, and paid for purchases at Whole Foods.
I have seven watches in my dresser that will no longer be used. I personally never thought I would have a Dick Tracy type of phone on my own wrist, but here we are. As time goes by I will become totally dependent on this watch.
I also plan on coming down to the Money Show in Vegas from May 12-14 to listen to your talks and finally get to meet you.
All the best,
Marvin”
Yandex – We snuck in and nibbled on some Yandex after the Russian Internet company had fallen some 70% from its highs as oil and the Russian Ruble collapsed. The big problem for Yandex isn’t growth, but it’s the fact that many of their expenses are denominated in dollars while they get paid in rubles. If the currency you’re getting paid with drops in value and the currency you have to convert that money into is spiking, then you’ve got tough times. Yandex dropped 5% this morning after reporting strong growth that was hurt by currency effects on their sales vs expenses as I just outlined. That’s not a surprise to anyone and the stock is holding rather steady given that it was up 30% in a straight line going into that earnings report this morning. I’m holding my Yandex steady for now.
Pandora – The company’s quarterly report was about inline with expectations when it comes to revenue growth and how much money the company continued to lose and burn last quarter. The most telling part of the earnings report press release was how the company doesn’t even bother to tell you how little the growth in users they gained last quarter even tho the quarterly report is full of growth metrics in other places. “Active listeners were 79.2 million at the end of the first quarter of 2015, compared to 75.3 million from the same period last year.” While revenues and advertising sales were up double digits, the company’s user base grew less than 5%, and that’s not what the shareholders will want to see. It’s possible that Pandora’s user base actually shrinks at some point this year, peaking here near 80-90 million or so. I think this stock could head back into the single digits next year if that happens.
Synaptics – The earnings and revenue growth were just about in line here, but expectations were for a big beat as the company supplies the iPhone 6 and 6 Plus and we all knew those were selling like hotcakes the last 90 days. The stock sold off about 5% after the report but has since mostly recovered. There’s lot of potential for strong growth ahead and upside to this year’s and next year’s numbers as Synaptics rolls out its 3-D Touch technology that will enable users to interact with their smartphones and other devices without constantly having to actually touch and drag and top your fingers on the glass.
