I thought that would get your attention with this “Man bites dog” headline. The reality is that the besieged maker of antiquated Blackberries (RIMM) has seen its stock soar by 85% since its September low, while Apple (AAPL) performed a 28% swan dive.
Don’t expect the greatest pairs trade of the year to work much longer. Blackberries are not going to retake the number one position as a handheld device anytime soon. The aberration masks what has been a major comeback by technology stocks that has been going on for the past ten days.
Since I put out my trade alert to load the boat with Apple call spreads on November 15 (click here). Apple has posted the biggest five day increase in market capitalization in the history of the stock market, some $93 billion.
The turnaround is evident across a broad swath of tech firms, unless, of course, they make PC’s. In fact, “the death of the PC” is becoming a major investment theme that is increasingly gaining credence, as consumers flock to higher end Apple products, or shift their computing entirely to tablets or smart phones. Look no further than Hewlett Packard (HPQ), which just broke down to a new multi year low on a massive accounting fraud, and Intel, which is definitely not feeling any Christmas cheer. The early numbers show that the tablet is the surprise, runaway bestseller in the early Christmas season.
The stock price really strapped on the turbocharger yesterday when Citibank (C) released a very bullish report on the long term outlook for the Cupertino, CA based company. It pegged a conservative target of $675/share, which is 11% below the consensus target of 56 analysts. It sees revenues going ballistic, from $156.5 billion in 2012 to $243.6 billion by 2015, a jump of 56%. Most importantly, cash & equivalents rocket from $29.1 billion to $139.9 billion.
This assumes 51% of revenues coming from iPhones, 21% from iPads, 15% from PC’s, and 9% from iPods. The implication is that this money machine will continue to run full speed for years to come.
My friends at Business Insider put out a fascinating table yesterday showing that just ten companies account for a stunning 88% of S&P 500 earnings. Apple is in the lead, followed by Bank of America (BAC), AIG (AIG), Goldman Sachs (GS) and Wells Fargo (WFC). The stunner is that apple accounts for an unbelievable 20% of all (SPX) profits! The data highlight how undervalued this stellar company is. Use every 20% pullback as a gift to further load the boat.