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Should You Be Worried About Apple?
By George Leong for Investment Contrarians | Dec 19, 2012
What the heck is going on with Apple Inc. (NASDAQ/AAPL)? The stock has corrected 26% since trading at a record high of $705.00 on September 21, and based on my stock analysis, Apple has made a chart reversal in a bear market.
While the price chart shows two major downward moves, don’t panic yet, but be careful.
I still consider Apple one of the best stocks in technology, but the company is clearly facing increased competition in the lucrative tablet, mini-tablet, and smartphone markets. The stock was recently downgraded, but sales in China are encouraging after Apple launched its “iPhone 5” and saw over two million units sold from December 14–17. (Source: “iPhone 5 First Weekend Sales in China Top Two Million,” Yahoo! Finance via Business Wire, December 16, 2012.) The iPhone 5 will be sold in over 100 countries by year-end.
Its valuation is attractive at 9.04X its estimated fiscal 2014 earnings per share (EPS) consensus estimate of $57.83 per diluted share, according to Thomson Financial. Its price/earnings-to-growth (PEG) ratio of 0.5 is bargain-cheap, based on my stock analysis.
The chart is bearish, showing the stock’s recent break below the 50-day moving average (MA) of $578.67 and the move below the 200-day MA of $597.41, which represents a bearish “death cross,” based on my technical analysis.
Chart courtesy of www.StockCharts.com
My stock analysis is that there are clearly some concerns that Apple may not be able to continue on its merry way. Chief rival Samsung sold a staggering 97 million mobile phones in the third quarter, well above the 23 million iPhones sold by Apple, according to Gartner. (Source: … Read More
Why Gold Will Be the Super Commodity
By George Leong for Investment Contrarians | Dec 5, 2012
I’m tired of reading and talking about the so-called “fiscal cliff,” but it could spell dire consequences for the economy if it is allowed to go through (and even if not). The reality is that America needs to stop printing money with no regard for the massive national debt load. Allowing the debt to continue to rise will punish the country’s future generations.
If we assume that the global economy will weaken, especially in the eurozone, the impact on global gross domestic product (GDP) growth would be negative. Stock values would fall, so you would need a safe haven to park your capital, which many of you know is in gold.
There’s been plenty of talk around here regarding gold and whether the precious metal is heading for $2,000. In my view, the current global risk will support and drive gold higher.
For any gold investor, the question is whether to buy the physical bullion or gold mining stocks. For the average investor, I favor gold stocks over the higher risk of other options.
The mining sector continues to be an excellent place to make money. An investment strategy would be to buy a mixture of exploration-stage gold mining stocks along with small to large gold producers. Under this scenario, you can play both the potential aggressive gains of exploration stocks and the steady returns of the large gold producers.
For exchange-traded fund (ETF) investors, the SPDR Gold Trust ETF (GLD) is worth a look and is currently trading in a sideways channel above the 50- and 200-day moving averages (MAs).
Chart courtesy of www.StockCharts.com
If you are looking at … Read More
The Reason Fast-food Stocks Should Be Amongst Your Top Picks
By George Leong for Investment Contrarians | Oct 4, 2012
Chipotle Mexican Grill, Inc. (NYSE/CMG) is one of my favorite places to grab a quick bite to eat. Yet, despite some stellar growth, the stock broke below $300.00 on Wednesday and has been steadily losing ground since trading at a 52-week high of $442.40 in April. Mounting concerns regarding future growth and multiple downgrades from analysts have hurt the stock. Hedge fund manager David Einhorn hammered another nail into the coffin when he said that Chipotle’s valuation “doesn’t make sense.”
With Chipotle Mexican trading at 28X 2013 earnings and with a price/earnings-to-growth (PEG) ratio of 1.7, my stock analysis is that the current valuation looks somewhat top-heavy.
According to my stock analysis, there are strong showings in the restaurant sector, especially in the fast-food area. A staggering 30% of the 96,000 new jobs generated in August were driven by the food-services sector, according to data from the U.S. Department of Labor.
The Bloomberg U.S. Quick Service Restaurant Index, which includes Yum! Brands, Inc. (NYSE/YUM) and McDonalds Corporation (NYSE/MCD), is up over 22% for the year to October 3.
Whether it’s eating out or cooking at home, the investment opportunity for food-related stocks is excellent, especially with the fast-food stocks, based on my stock analysis.
At the top of the fast-food chain, according to my stock analysis, is McDonalds, with over 33,000 restaurants in 119 countries, including sizzling growth in China. It plans to have 2,000 restaurants in place in China by 2013. Based on my stock analysis, McDonalds has been a top performer in the restaurant sector over the past decade after making a dramatic shift in its menu to … Read More
Why Israel Is Hot for Start-ups
By George Leong for Investment Contrarians | Sep 21, 2012
Israel is not widely known as a hotbed for start-ups, but this dynamic country of 7.9 million people situated on the Mediterranean Sea is just that. The country has the second highest number of start-up companies in the world, trailing only the U.S. There are over 120 Israeli companies listed on U.S. exchanges, including about 60 on the NASDAQ, which makes Israel second only to China on this index. However, a major difference is that Israeli stocks are more trustworthy than Chinese stocks, based on my stock analysis.
My stock analysis is that one of the top Israeli and best stocks listed in the U.S. equities market is pharmaceutical giant Teva Pharmaceutical Industries Limited (NASDAQ/TEVA; NYSE/TEVA), a developer of generic and branded drugs and active pharmaceutical ingredients.
Technology and healthcare are some of the leading industries in Israel, based on my stock analysis. My stock analysis shows that the country has seen a steady rise in technology companies that have performed well on the world stage.
I will mention a few that are good examples, but again, these stocks are not meant as specific investment advice and are more for information purposes, based on my stock analysis.
A small-cap technology stock that has excellent long-term potential for above-average price appreciation is Petach-Tikva, Israel–based ClickSoftware Technologies Ltd. (NASDAQ/CKSW), according to my stock analysis.
Founded in 1979, ClickSoftware creates solutions that allow companies to manage resources efficiently and effectively. The company develops and sells workforce management and service optimization solutions that allow companies to improve productivity, customer satisfaction, and cost effectiveness. Its offices are in Israel, the U.S., Europe, and Asia.
Chart … Read More
Your Best Bets in Technology Investing
By George Leong for Investment Contrarians | Sep 5, 2012
Facebook, Inc. (NASDAQ/FB) traded at another new low of $17.55 on Tuesday, down a whopping 61% from its initial public offering (IPO) high of $45.00 on May 18. Initial investors are selling their shares as the lock-up periods come up; until this ends, the stock will continue to face selling pressure. Conversely, Amazon.com, Inc. (NASDAQ/AMZN) and Google Inc. (NASDAQ/GOOG) both recently traded at record highs in the equities market.
So while the aforementioned stocks are all Internet-based, the difference is that Amazon.com and Google have managed to successfully monetize their massive user base, while Facebook has yet to figure out how to make money from its over 900 million users.
The trajectory of Apple Inc. (NASDAQ/AAPL) helps dictate the movement of the NASDAQ in the equities market. When Apple lost seven percent in five sessions from April 10 to below $600.00 on April 16, the NASDAQ lost some ground and breached support at 3,000. As Apple rallied towards its 52-week high of $680.87 on August 27, the NASDAQ touched a new 52-week high.
Technology, growth, and small-cap stocks led the way in August, with the NASDAQ and Russell 2000 advancing 4.3% and 3.3%, respectively. Technology is leading the broader market with a 17.7% advance to date in 2012, well ahead of the 11.8% of the S&P 500.
And as we move forward, I continue to feel that the top growth areas to make money in the equities market will still be in technology.
I believe the areas that will offer opportunity for the best stocks in the equities market are mobility applications for tablets and smartphones, as users shift away … Read More
Tablet Wars Picking Up
By George Leong for Investment Contrarians | Sep 4, 2012
The markets for smartphones and tablets are fiercely competitive. At stake are hundreds of billions of dollars and that means riches for the market leader.
Based on my stock analysis, the king of tablets at this juncture is Apple Inc. (NASDAQ/AAPL), the global market share of which is around 69% in the second quarter and it wants to hold on to its share. (Source: ABI Research.) In a recent court ruling, Apple was awarded just over $1.0 billion from Samsung Electronics Co. Ltd. (KRX/005930), which has an eight percent market share, after claiming that Samsung’s smartphones and tablets look and feel like Apple’s “iPhone” and “iPad.”
The positive ruling was a win for Apple, even if the company doesn’t really need the money. Going forward, my stock analysis is that market rivals will be reluctant to make products similar to those of Apple.
Apple, which I still consider one of the best stocks in technology, will face increasing competition in the lucrative and surging tablet and smartphone markets, based on my stock analysis. Currently, Apple is the market leader in the booming tablet market.
The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. IHS iSuppli estimates that about 360 million tablets will be sold by 2016. Apple knows this, which is why the company took Samsung to court; Apple wants to hold onto its market leader status.
According to my stock analysis, Apple had better keep an eye on Amazon.com, Inc. (NASDAQ/AMZN), which has the size to fight Apple. Amazon.com’s market share expanded to 22% … Read More
Rest in Peace, PC Market
By George Leong for Investment Contrarians | Aug 15, 2012
The verdict is in, and it doesn’t look good for the personal computer market. Dell Inc. (NASDAQ/DELL) knows this and so does Hewlett-Packard Company (NYSE/HPQ).
Sales of personal computers (PCs) in the U.S. plummeted by 11% year-over-year in the second quarter, according to International Data Corporation (IDC). The decline was six percent based on research by Gartner, Inc. (NYSE/IT), but this figure was based on sales of PCs and laptops. On a global basis, PC shipments fell 0.1% year-over-year, but the Gartner research indicated it was the seventh straight month of declines or slight increases. Based on my stock analysis, the PC is in deep trouble unless PC makers can re-invent the PC and laptop to challenge the tablet.
You can attribute the fall of the PC to the superlative rise in tablets, according to my stock analysis.
The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. By 2016, it’s estimated that about 360 million tablets will be sold, according to IHS iSuppli. By comparison, global PC shipments are estimated at 528 million in 2016, according to IDC. In the U.S., PC sales came in at 71.3 million in 2011, down five percent year-over-year and the first decline since 2001.
Users want tablets, not hybrids or smaller-sized laptops. Hewlett-Packard had been in the tablet market, but left after feeling the death grip of Apple Inc. (NASDAQ/AAPL). Research In Motion Limited (NASDAQ/RIMM), previously viewed as a chief rival, has made numerous miscalculations with the constant delay of new products and a struggle to find itself, according … Read More
Newmont—a Widow Stock for Gold Investors
By George Leong for Investment Contrarians | Aug 13, 2012
Since the bursting of the tech bubble in March 2000 and before the recent financial and credit crises struck, at least three sectors have managed to post significant gains: bonds, real estate, and small-caps. For some reason, however, gold remained under the radar for most investors. Yet, since the stock market peak, prices have climbed past many psychological marks. The shares of companies that mine the metal have gone along for the ride.
The perennial question for any gold investor is whether to buy bullion or gold mining stocks. I favor gold stocks over the higher risk of other commodity options.
While favoring gold stocks, I view Newmont Mining Corporation (NYSE/NEM), in particular, as one of the best stocks in gold, because I believe this stock will add value to your portfolio for years to come.
I’ll go even so far as to say that this stock is the only one you will need to own for the next decade, with its good price appreciation potential and dividend.
Without a doubt, for those investors looking to hedge their portfolios with gold exposure, Newmont Mining deserves to be at the top of the list. This company stands out among other players for two reasons: 1) size; and 2) low production costs.
Over the years, Newmont has grown rapidly through mergers and acquisitions, as well as the development of its existing reserves. This strategy resulted in the company’s diversified risks; namely, unlike junior producers, Newmont doesn’t depend on one or two of its mines for its future, and it is certainly not exposed to politically unstable regions.
In that regard, the risk … Read More
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