Trade Alert – Water, fruit and Beyonce
Here’s what we know — Wall Street’s expectations for Apple are definitely, FINALLY, lowered. That doesn’t mean that those expectations can’t go much lower, as we’ve hardly scratched the surface of the 27 buys and 21 strong buys out of the 57 total sellside analysts out there who cover the stock. But, if iPhone sales and iPad Mini sales are still what matter.
Let’s put some of these numbers in further perspective for you:
Last quarter, Apple sold a total of about 2.1 million iPhones 4S’s in China. Last night, the company announced that it had sold 2 million iPhone 5s in the first three days of sales in China over the weekend. They sold a total of 27 million iPhones of all kinds last quarter. The company sold a total of 44 million iOS devices, including every iPod Touch, iPhone, and iPad of any kind last quarter.
This quarter, analysts have become worried because some of them think Apple might sell fewer than 48 million iPhones this quarter. Analysts are looking for 26 million iPads Minis and normal iPads this quarter. A few million more iPod Touches this quarter, and we’re talking about more than 75 million iOS 6 devices being sold this quarter. Vs the 44 million last quarter.
Are you panicked out of this stock that’s yielding 2%, trading at about 7x next year’s earnings when you subtract out the $125 billion in net cash per share on the balance sheet, and will probably be rolling out some new TV platforms, and other form factors of the iOS devices, creating a new subscription-based music solution, and who knows what else in the next twelve to eighteen months yet?
No? Me neither. I’ve got a ton of Apple common from much, much lower levels still, and I’m continuing to slowly but surely scale into more Apple calls with strikes from $600 and up dated out into April or beyond.
One last Apple perspective for you — 12 months ago today, Apple was trading at $380 a share. If you can pretend for a moment that the momentum lovers, day traders and amateur investors never drove the stock up from that level to $700 plus just a few months ago, you’d be looking at a stock that’s up $130 a share or 35% on the year. I know it sucks when you look back at the $700 level and wonder why you didn’t sell every last share and load up on Apple puts, but that’s neither realistic or even optimal for the long-term. I sold calls and trimmed down my AAPL exposure as we were near and above that $700 level. Realistically, that’s the only way to manage this stock – scale into more in major weakness and trim out of exposure on major spikes. You’ll end up missing big moves up if you try to catch every last top and bottom in a stock like this.
I remain an Apple bull and still have a $1000 price target for it sometime in the next 12-24 months, as I have since the stock was a small fraction of even today’s reduced prie. Could Apple get back to $700 a share in the next few months? Doesn’t seem plausible any more does it? Well, did $500 a share seem plausible when the stock hit $700 just a couple months ago? Exactly.
I’m also bidding on some LNN common stock here this morning. Just a steady as she goes tranche.
Stay humble. If you don’t, the market will make you anyway.
http://youtu.be/ZL_eRY1PvxM 16 Year-Old Beyoncé Talking About God, Staying Humble, and Motivation
