by Steve McDonald, Bond Strategist, The Oxford Club
Monday, September 24, 2012
This Week: Apple Does It Again, But… Stocks Aren’t Addicted to QE… and the SITFA (Slap in the Face Award)
Well, it should come as no surprise to anyone who watches this segment that Apple (Nasdaq: AAPL) blew through $700 last week. I was talking about it when it crossed $600 back in July.
But the real news here is that almost no one predicted the amount of demand for the new iPhone. They were selling 25,000 a minute as of last Wednesday.
25,000 a minute!
Alright, this is where reality comes into play…
Most investors who are buying AAPL now are doing so in the hope that they will see a double or some really big number based on the new iPhone. That’s what the hype is saying. But as I said last August, buy on the rumor; sell on the news.
There will be no $1,000 AAPL on this announcement, and forget about $1,200. Someday maybe, but not in the short term.
The fact is that you have a much better chance of seeing bigger returns from beaten-up Seagate Technology (Nasdaq: STX) according to a Barron’s article last week.
Seagate is in the hard drive business. And the shift away from PCs and laptops, which use hard drives, to tablets that run off of flash memory has meant they’ve seen a big drop in business.
But Apple users have to store their information somewhere; flash doesn’t make it. And they are storing it in the cloud, which uses Seagate Drives.
Barron’s said the entire shift to tablets and iPods is dependent on drives in the cloud to make it work, and Seagate will own 61% of the cloud drive business by 2020.
That’s a big growth story and one you need to pay attention to!
Next up: Stocks That Are Not Tied to QE… I know you’ll be stunned: Apple Leads the Way in This Market Watch Article
Most stocks are addicted to QE, and as the euphoria of the new program of buying wears off, so will the big run-up in stocks, according to Market Watch. But it also mentioned 10 stocks that run on their own cycle, with reasonable valuations and dividends that don’t need QE to run up.
Number one is Apple, of course. I don’t think you can read or write anything about money now without including Apple. That’s not a good sign.
Marching to their own beat, blowing through price targets, oblivious to the weak economy and showing no signs of slowing, all signs indicate that these 10 companies will not fade as the new QE program effect will.
Surprisingly, Facebook (Nasdaq: FB) is number two. Alan Lancz, President of Allan Lancz and Associates, is selling Apple and Google (Nasdaq: GOOG) to buy the badly beaten up FB. He says it is bouncing off the bottom since hitting its low in September.
Other names in the group include Newmont Mining (NYSE: NEM), a company I have talked about here as an alternative to physical gold. Then there’s CF Industries (NYSE: CF), which manufactures and distributes fertilizer (you should be sick of hearing me talk about fertilizer and seed companies) Procter & Gamble (NYSE: PG), 3M (Nasdaq: MMM), American Water Works (Nasdaq: AWK), Johnson & Johnson (NYSE: JNJ), Kinder Morgan (NYSE: KMP) and Total SA (NYSE: TOT), the French energy giant.
To win in this market, you better be looking beyond the headlines. Which is exactly where these 10 are. Kinder Morgan jumps out at me with its 5.9% dividend. Their earnings and revenue numbers look good, too.
Finally the SITFA
This week, it goes out to all us boomers who thought we were so cool in the 60s: the so-called counter culture, remember?
Don’t trust anyone over 30? The summer of love?
Well, an icon of that counter culture, Bob Dylan, is now being used to front a $300-million bond offering. You heard me right: Bob Dylan’s music is being used to push corporate bonds.
I guess the times they were a changing, temporarily. Maybe it was Positively Wall Street, not Fourth Street.
If that’s not bad enough or enough of a nostalgic punch in the stomach, David Bowie – You remember… The guy who pushed cross dressing and other twists – sold $55 million in bonds based on his album sales.
Ziggy, what happened?
What’s next, the Stones in pin stripes and rep ties?