What is different this January?

  • Posted: 22 December 2010 12:07 PM

    Long time AAPL investors and traders know that January has not been a good month.  The last good January was in ‘05, and even that was an aberration.  What could make this January different?

    The 1Q results will be fabulous.  But that is hardly unique.  We could get one or more big announcements.  But January keynotes are nothing new, and will any be bigger than the iPhone announcement in ‘07.  Not likely.  So are we in for another blah mid-winter?

    I see a couple of differences that might provide a boost.  One is valuation; Apple has seldom ended a year with such a low PE.  The other is the Fed.  The amount of money being printed is unprecedented and there is no end in sight.  All this money has to go somewhere, and it will not all go to Chinese inflation.  Some of it is going into equities.  There is also money coming out of bonds looking for a home.

    So, my bold New Year’s prediction is that this January will break the pattern and prove a good month to own Apple.

         
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    Posted: 22 December 2010 12:37 PM #1

    Previous January months had MacWorld Expo keynotes, with the resultant deflation of expectations. This coming January will be devoid of any high profile MacWorld events, therefore expectations for any big announcements this month will not be long expected, and consequently they will not be reflected in the stock price. Any announcements coming from Apple will be more sudden from now onwards with respect to previous years.

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    Posted: 22 December 2010 01:00 PM #2

    Fortune magazine has its year end “where to invest” issue out now. It picks ten stocks to buy for 2011. Apple is one. This is notable because the same magazine had expressed concern about Apple’s stock price just a few weeks ago, relying on the tired old market cap too big, growth might slow, competition in main markets mantra.

    They now completely reversed (and admitted such), noting that Apple is cheap on a valuation basis and growth in 2011 is assured. The Ipad is a game changer and isn’t even in comparables for January and April results. Fortune declares Apple to be cheap and ready to move up.

    This kind of “wake up” by the busines media, and the investor class out there will be reflected in money moving into Apple in the new year…In fact, I think we are seeing it right now with the oh so subtle desire to own this stock evidenced in the melt up the past week or so…

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    Posted: 22 December 2010 01:03 PM #3

    awcabot - 22 December 2010 04:37 PM

    Previous January months had MacWorld Expo keynotes, with the resultant deflation of expectations. This coming January will be devoid of any high profile MacWorld events, therefore expectations for any big announcements this month will not be long expected, and consequently they will not be reflected in the stock price. Any announcements coming from Apple will be more sudden from now onwards with respect to previous years.

    I somewhat agree with this. I think earnings will always trump a macworld event. they were held close together which blurs the issue. For me, since I have been in AAPL since early 2007, is the fact that we have not had an optimistic market going into January. This forum to many times becomes AAPL centric without realizing the total market impact. This market has had a huge weight lifted off of it. I am not going to put my neck in the rope, but 2011 should be a great year for the market which in turn means an even better year for AAPL.

    Merry Christmas,

    Mark

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    Posted: 22 December 2010 02:57 PM #4

    I’ve hedged my bets…I think I’m done trading for the year, but I’m leaving my LEAP position alone, and keeping an eye on my medium-term Jul 11 call.  Nothing wrong with a little capital preservation, IMHO.

    January could be tumultuous even without the “selloff effect”.  I don’t see a pattern of selloffs every year but I do see a possible trend and it’d be foolish not to respect it.  The Verizon announcement might or might not happen, and if it doesn’t, some will probably find an excuse to bring the stock down.  AAPL’s behavior before and after earnings will be another huge unknown.  But cold hard results and solid (for Apple) guidance should eventually get AAPL hovering solidly in 340+ territory by February.  And really, that number could be higher, because a $6.00+ EPS will make ttm earnings somewhere around $17.50, which suggests a 350+ share price with a P/E of 20 or more.

    [ Edited: 22 December 2010 03:00 PM by Mav ]

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    Posted: 23 December 2010 12:29 AM #5

    capablanca - 22 December 2010 04:07 PM

    Long time AAPL investors and traders know that January has not been a good month.  The last good January was in ‘05, and even that was an aberration.  What could make this January different?

    The 1Q results will be fabulous.  But that is hardly unique.  We could get one or more big announcements.  But January keynotes are nothing new, and will any be bigger than the iPhone announcement in ‘07.  Not likely.  So are we in for another blah mid-winter?

    I see a couple of differences that might provide a boost.  One is valuation; Apple has seldom ended a year with such a low PE.  The other is the Fed.  The amount of money being printed is unprecedented and there is no end in sight.  All this money has to go somewhere, and it will not all go to Chinese inflation.  Some of it is going into equities.  There is also money coming out of bonds looking for a home.

    So, my bold New Year’s prediction is that this January will break the pattern and prove a good month to own Apple.

    Another indicator that is favorable for 2011 is the “3rd-Year of a Presidential term” theme.  2011 could be quite the year.  It is after 2011 that is cause for concern.  So, let’s party in 2011 like it’s 1999 as they say and worry about 2012 and after later.

         
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    Posted: 23 December 2010 12:34 AM #6

    madmaxroi - 23 December 2010 04:29 AM

    Another indicator that is favorable for 2011 is the “3rd-Year of a Presidential term” theme.  2011 could be quite the year.  It is after 2011 that is cause for concern.  So, let’s party in 2011 like it’s 1999 as they say and worry about 2012 and after later.


    Could not agree more, beside the Nicolas Cage movie said the world is coming to an end in 2012. rolleyes If it does it will be out of our control. 

    Staying on the movie theme, we watched Wall Street last night. I have to say I like the first one better. I am not a big Oliver Stone fan so this was no surprise.

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    Posted: 23 December 2010 01:24 AM #7

    Mav - 22 December 2010 06:57 PM

    I’ve hedged my bets…I think I’m done trading for the year, but I’m leaving my LEAP position alone, and keeping an eye on my medium-term Jul 11 call.  Nothing wrong with a little capital preservation, IMHO.

    January could be tumultuous even without the “selloff effect”.  I don’t see a pattern of selloffs every year but I do see a possible trend and it’d be foolish not to respect it.  The Verizon announcement might or might not happen, and if it doesn’t, some will probably find an excuse to bring the stock down.  AAPL’s behavior before and after earnings will be another huge unknown.  But cold hard results and solid (for Apple) guidance should eventually get AAPL hovering solidly in 340+ territory by February.  And really, that number could be higher, because a $6.00+ EPS will make ttm earnings somewhere around $17.50, which suggests a 350+ share price with a P/E of 20 or more.

    It has seemed like many have predicted a January VZ iPhone. Not sure how baked-in that meme is, but could be a letdown if we got to Feb and no announcement.

    Don’t we usually have a run-up up to earnings, then a letdown? That’s my recollection. If so, seems like Jan calls are bueno.

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    Posted: 23 December 2010 01:42 AM #8

    mbeauch - 23 December 2010 04:34 AM

    Staying on the movie theme, we watched Wall Street last night. I have to say I like the first one better. I am not a big Oliver Stone fan so this was no surprise.

    Ouch…I just bought the Blue-Ray version of Wall Street at the store last night.  Now you’ve got me wondering.  I take it you won’t be watching Oliver Stone’s JFK tonight either?

         
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    Posted: 23 December 2010 11:15 AM #9

    madmaxroi - 23 December 2010 05:42 AM
    mbeauch - 23 December 2010 04:34 AM

    Staying on the movie theme, we watched Wall Street last night. I have to say I like the first one better. I am not a big Oliver Stone fan so this was no surprise.

    Ouch…I just bought the Blue-Ray version of Wall Street at the store last night.  Now you’ve got me wondering.  I take it you won’t be watching Oliver Stone’s JFK tonight either?

    JFK, another old but decent movie. My biggest problem I think with Stone is that he portrays his opinion as fact. There are a few other things but I will keep them to myself. The new WS is watchable, Tammy did not fall asleep.  LOL  JFK was insanely long. I will say this, I have a Blu-Ray player and I am a huge fan, but some movies you really don’t need to pay for BR. Ordering it off of itunes in this case (we did) is completely sufficient.  grin

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  • Posted: 23 December 2010 10:37 PM #10

    Red shirted ensign - 22 December 2010 05:00 PM

    Fortune magazine has its year end “where to invest” issue out now. It picks ten stocks to buy for 2011. Apple is one. This is notable because the same magazine had expressed concern about Apple’s stock price just a few weeks ago, relying on the tired old market cap too big, growth might slow, competition in main markets mantra.

    They now completely reversed (and admitted such), noting that Apple is cheap on a valuation basis and growth in 2011 is assured. The Ipad is a game changer and isn’t even in comparables for January and April results. Fortune declares Apple to be cheap and ready to move up.

    This kind of “wake up” by the busines media, and the investor class out there will be reflected in money moving into Apple in the new year…In fact, I think we are seeing it right now with the oh so subtle desire to own this stock evidenced in the melt up the past week or so…

    You are correct that there will be significant money flows into AAPL. they just won’t happen until mif February.  Then watch out, AAPL will double by April expIry.

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    Posted: 23 December 2010 11:18 PM #11

    Gregg Thurman - 24 December 2010 02:37 AM
    Red shirted ensign - 22 December 2010 05:00 PM

    Fortune magazine has its year end “where to invest” issue out now. It picks ten stocks to buy for 2011. Apple is one. This is notable because the same magazine had expressed concern about Apple’s stock price just a few weeks ago, relying on the tired old market cap too big, growth might slow, competition in main markets mantra.

    They now completely reversed (and admitted such), noting that Apple is cheap on a valuation basis and growth in 2011 is assured. The Ipad is a game changer and isn’t even in comparables for January and April results. Fortune declares Apple to be cheap and ready to move up.

    This kind of “wake up” by the busines media, and the investor class out there will be reflected in money moving into Apple in the new year…In fact, I think we are seeing it right now with the oh so subtle desire to own this stock evidenced in the melt up the past week or so…

    You are correct that there will be significant money flows into AAPL. they just won’t happen until mif February.  Then watch out, AAPL will double by April expIry.

    Can we assume that your double comes from a serious sell-off in late Jan. Double here is 640 so could you elaborate.

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  • Posted: 23 December 2010 11:45 PM #12

    mbeauch - 24 December 2010 03:18 AM

    You are correct that there will be significant money flows into AAPL. they just won’t happen until mif February.  Then watch out, AAPL will double by April expIry.

    Can we assume that your double comes from a serious sell-off in late Jan. Double here is 640 so could you elaborate.

    My apologies for expressing a moment of irrational exuberance.  I posted that while waiting for gifts to be courtesy gift wrapped.  I made the unfortunate decision to wait next door where they served nachos and beer.

    I do expect a sell off of ~12% from AAPL’s high the morning after earnings (down to ~$315 from a high of ~$360), then back up to ~$460 by the end of April, for a growth rate of ~45% in two months.  This rate is based on expected cash inflows, past years’ trading activity, and management’s guidance for the June quarter.  I have not considered a Verizon iPhone because I do not expect it until 2012.

    I promise not to post in the future when I have been “relaxing”.

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    Posted: 24 December 2010 12:19 AM #13

    Gregg Thurman - 24 December 2010 03:45 AM
    mbeauch - 24 December 2010 03:18 AM

    You are correct that there will be significant money flows into AAPL. they just won’t happen until mif February.  Then watch out, AAPL will double by April expIry.

    Can we assume that your double comes from a serious sell-off in late Jan. Double here is 640 so could you elaborate.

    My apologies for expressing a moment of irrational exuberance.  I posted that while waiting for gifts to be courtesy gift wrapped.  I made the unfortunate decision to wait next door where they served nachos and beer.

    I do expect a sell off of ~12% from AAPL’s high the morning after earnings (down to ~$315 from a high of ~$360), then back up to ~$460 by the end of April, for a growth rate of ~45% in two months.  This rate is based on expected cash inflows, past years’ trading activity, and management’s guidance for the June quarter.  I have not considered a Verizon iPhone because I do not expect it until 2012.

    I promise not to post in the future when I have been “relaxing”.


    LOL  I can tell by how you managed to quote me that there has to be something going on. tongue laugh Enjoy yourself.

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