Apple (AAPL)
By
Paul Goodwin, Editor of
Cabot China & Emerging Markets Report
From Cabot Wealth Advisory, 5/4/09
Sign up for free Cabot Wealth Advisory e-newsletterOne of our rules for evaluating growth stocks is that the leaders of a previous bull market are seldom the leaders of the next one. In fact, the odds are about four-to-one against it.
But
Apple (AAPL) is apparently beating those odds. The stock, which peaked at 203 during the last days of 2007 and completed a kind of double top at 192 about a year ago (with a dip to 115 in between), is now coming off a new base after bottoming at 78 in January.
It's not just the run from 78 to 138 that makes AAPL attractive. And it's not just the boost the stock will get when (and if) Steve Jobs reports for duty again.
No, it's the flood of sales for the iPhone and all the apps for the iPhone flowing together with the billions of songs purchased from iTunes and the still substantial sales of iMacs and PowerBooks to make a river of revenue. So far, analysts haven't been able to get their minds around the money you can make by offering consumers "insanely great" products. And we're not even talking about the possibility of getting the iPhone into the hands of Chinese consumers.
Apple's revenues during the fourth quarter of 2008—the lowest point of a very low period for the market—were still up 6%, which improved to 9% in Q1. Earnings were up 1% in Q4 and have improved to a respectable 15% in Q1. AAPL isn't cheap (P/E ratio of 23) and isn't unknown (857 institutional supporters). But it's pretty much broken every rule in the book, and if it wants to be a leader in this new bull market, I'm not going to say no to it.
Editor's Note: Paul Goodwin's Cabot China & Emerging Markets Report is your best source of advice when it comes to investing in Chinese stocks. In fact, Cabot China & Emerging Markets Report was the top performer of all investment advisory newsletters in both 2006 and 2007, bringing subscribers who followed editor Paul Goodwin's advice gains of 78.6% and 74.1%. For most of the past year, Paul's subscribers had been heavy in cash, preserving their profits. But Chinese stocks have been heating up, and we're very optimistic about their prospects in 2009. If you'd like to own the top-performing Chinese stocks as they rocket ahead in the next bull market, I strong recommend that you join them. To get started with a no-risk trial subscription, simply click here.
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