After crushing analyst expectations with your earnings and becoming the largest company by market cap in the world, what does Apple do next?
How about paying a dividend?
Sanford C. Bernstein analyst Toni Sacconaghi said Apple is “dramatically underowned relative to its peers” by institutional and value fund investors because it is sitting on $97.6 billion in cash.
Apple “would get a whole new group of investors if you returned some of that cash,” he said.
Late Tuesday, Apple reported earnings of $13.87 a share, double analyst expectations, thanks to booming sales of iPads and iPhones.
Its market cap of $417 billion “is deserved,” he said. “This is a company that’s going to generate over $40 billion in earnings this year, so its earnings multiple is about 10 times earnings, which is very reasonable.”
And that’s only the start. He sees continued growth from the Asia-Pacific region, which was down in the last quarter because of the delayed introduction of the iPhone 4s in China. Even if phones are sold there at much lower price points, “we’re still talking about a very significant market” for smartphones, Sacconaghi said.
Should Apple use some of that cash to buy a supplier? Glen Yeung, a semiconductor analyst at Citigroup, said in a separate interview that it wouldn’t make sense of Apple to buy Broadcom [BRCM 35.29 -0.50 (-1.4%) ], for instance, since Apple buys only 10 percent of the company’s chips. Buy Broadcom and the company will lose 90 percent of its business because customers aren’t going to want to buy chips from Apple, Yeung said.
“So financially it won’t make a lot of sense,” he said.
He also doesn’t anticipate other companies in his coverage universe — Qualcomm [QCOM 57.81 -1.18 (-2%) ] and Texas Instruments [TXN 32.36 -0.44 (-1.34%) ], for instance — to be targets either.
Mike Abramsky, a managing director at RBC Capital Markets, likened Apple to a “tsunami” because of its large valuation and cash pile. He said he isn’t sure if Apple will try to move from tablets and smartphones into television, but he said whatever it does the company will “continue to surprise” under new CEO Tim Cook.
“Tim and the team will have their own approach,” he said. “The company has some big flywheels established by Steve [Jobs] and his team, and that will continue.”
Source: Wednesday, 25 Jan 2012 | 1:58 PM ET Text Size By: Margo D. Beller
Special to CNBC.com
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
Momentum stayed positive for the new year, with stocks posted another day of gains in 2012 as the start of earnings season sparked optimism for a market trading at its highest levels since early August.
Major indexes rallied around the 1 percent range, with the strongest gains coming from materials, financials, industrials and energy stocks. Defensive sectors were the least buoyant as risk-on looked to be the day’s theme.
The early-January rally — known as the “January effect” and often a bullish sign for markets — inspired hopes that US markets were beginning to shake off headline risk from the European debt crisis and moving toward a more independent track.
“We’ve been handcuffed by whatever happens in Europe,” said Ryan Detrick, senior analyst at Schaeffer’s Investment Research in Cincinnati. “Now we’re starting to see a little decoupling from that. When you consider some of the recent economic strength we’ve had, it’s a potentially good sign.”
Since 1950, the market has started the year with five consecutive gains. It ended the year positive 87 percent of the time, according to the Stock Trader’s Almanac.
Source:CNBC.com | January 10, 2012 | 10:41 AM EST
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
The tide appears to be turning for emerging markets (EM), after a dismal year that saw the MSCI emerging markets index fall by 20 percent, lagging both the European and U.S. markets. According to Citi’s global emerging markets equity strategist Geoffrey Dennis, the outlook for this asset class is bright, with interest rates set to head lower and the likelihood of a soft landing for China’s economy.
Dennis says the conditions that contributed to the outflow of funds from emerging markets last year have eased, and he expects a 25-30 percent rebound in EM stocks in 2012.
“(The) thing that really hurt emerging markets last year was a much sharper interest rate cycle and inflation cycle than any of us had anticipated in the beginning of the year and that was the big negative. And as we head into 2012, that is all over now. Interest rates are not going up any more in the emerging markets and I think that will create better conditions for the year ahead,” he told CNBC on Wednesday.
Sky-high inflation in China, which have forced authorities to tighten monetary policies for much of 2011 and taken a toll on stock markets as a result, is set to ease in 2012, says Citi. The bank expects the country’s consumer price index to fall to an average 4.1 percent, after hitting a summer peak of 6 percent in 2011.
“This sharp drop in inflation should open the way for easier monetary policy,” the bank said in a report. Citi, which is overweight in Chinese stocks, is expecting as many as eight 50-basis point cuts in the reserve requirement ratio this year, with the first coming before Chinese New Year.
Citi does not expect a hard landing for China’s economy, and predicts a fall in the country’s growth rate to 7.5-8 percent in the current quarter before rebounding by the end of the year. “Full year growth (is) probably going to be around the 8.5 percent level, and that is consistent with a soft landing,” Dennis said.
Citi is also bullish on South Korea, where central bankers are also expected ease monetary policy in 2012. The Bank of Korea (BOK) has kept rates steady since it last hiked rates by 25 basis points in June last year.
“The BOK probably begins to cut interest rates sometime in the first half of 2012,” Dennis said.
“We have overweights right now in Korea, in China.. so we’re playing the value story particularly in Korea and China in the sense that markets are very cheap there and we do expect the economic numbers to begin to bottom out.”
Also expected to support stocks is the stabilization of emerging market currencies, which have been battered late last year against the U.S. dollar.
“We think the dollar is going to be more of a neutral factor for emerging markets this year, what that means in practice is that these currencies which have come under some pressure towards the end of last year began to stabilize, and that of course will be very important for getting money coming back to the emerging markets,” Dennis pointed out.
Still, the outlook for EM will hinge on the global economic environment, particularly Europe, which Citi isn’t expecting a worst-case scenario.
“We don’t expect the global economy to blow up here and go back into the sort of conditions we had in 2009. We don’t expect there to be a cathartic break up of the euro in 2012. (But) both of those are very important assumptions,” he said.
Source:
CNBC.com | January 04, 2012 | 12:42 AM EST
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
Banks are lending again.
After three years of Scrooge-like underwriting following 2008′s financial crisis, banks have turned on the spigot, boosting lending at annual rates as high as 8.2% since July, according to Federal Reserve statistics.
Lending had fallen from mid-2008 through this year’s second quarter, deepening what became the worst recession since the Great Depression. The data seem to allay fears that making banks keep more capital on their books as a cushion against future downturns and loan losses will take away the cash flow businesses need to keep the recovery moving.
Among the reasons: The economy is improving, while smaller banks have positioned themselves to pick up slack left as bigger banks remain cautious, says Stuart Hoffman, chief economist at Pittsburgh-based PNC Financial. The most bullish part of the upturn is that it occurred when banks knew the Fed was preparing for last week’s preliminary announcement of tougher new capital standards, he says.
“What the Fed did was well-advertised,” Hoffman says. “As for any sudden negative effect on lending, that’s not going to happen.”
The sharpest improvement has come in business lending, raising hopes that it can spur increased capital investment, the seed corn of business expansions. Commercial and industrial loans grew at an annualized pace of more than 20% in August and more than 15% in October, the best growth since early 2008. In between, commercial lending dropped 19% in 2009 and an additional 9% last year.
Even small businesses have seen a difference, says Bill Dunkelberg, chief economist of the National Federation of Independent Business. In a monthly NFIB survey, only 3% of small-business owners say lack of credit is their most important problem, trailing taxes, regulation and still-sluggish demand.
The last one especially is making entrepreneurs wary of borrowing, he says: Only 12% think business will be better in six months than it is now.
Small businesses are also missing out on the cheap money that homeowners are seeing, he says, with commercial loan rates above 6%.
“Two-thirds of business owners say, ‘Who wants a loan?’ ” says Dunkelberg, who is also chairman of a small Pennsylvania bank. “In thirty years, I’ve never seen anything like it. The banks all have money to lend, but there’s a shortage of eligible customers coming in.”
Source: By Tim Mullaney, USA TODAY, December 28, 2011
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
European policymakers are taking a page out of their American counterparts’ playbook to address their burgeoning sovereign debt crisis, banking analyst Dick Bove said.
The European Central Bank already has begun its own version of quantitative easing, the program used by the Federal Reserve to recapitalize banks during the financial crisis that exploded in 2008, said Bove, vice president of equity research at Rochdale Securities.
At the same time, Bove said the ECB is well on its way to a “partial nationalization” of European banks, in which it will take equity stakes in the institutions as it seeks to stabilize the financial system.
The end result could be a boon for banks in the US and elsewhere that will benefit from the pain their European competitors will have to endure, Bove believes.
“The suffering in Europe may impact the rest of the world. However, there will be significant opportunities for non-Euro banks if this train of events occurs,” Bove said in a research note. “The Euro zone banks will now become quasi utilities. Thus, the non-Euro zone banks will begin to fund the private sector companies that the Euro zone banks cannot handle.”
Comparisons between the current state of European banking, which is bracing against the losses the system will take from likely national debt defaults, and the situation in 2008 when U.S. banks took massive writedowns from subprime mortgage losses, are easy to make.
Both suffered as much or more from illiquidity as insolvency, and solutions to both situations focus heavily on government backstop measures to ensure that capital remains flowing.
A move starting Dec. 21 that will allow European banks to borrow at low rates and in turn buy up sovereign debt looks, to Bove, “suspiciously like quantitative easing .”
In the U.S. Fed’s QE measures, it slashed interest rates to near zero and bought up mortgage securities and government debt to recapitalize the banks and get money flowing through the system.
The European version also includes low rates and incentives for banks to buy sovereign debt.
A notable difference: The ECB will not buy the debt itself, allowing it to avoid navigating the political minefield in which the Fed found itself.
What Can Individual Euro Zone Countries Do to Solve Crisis?Why Europe Has Investors Running Scared—AgainPondering a Dire Day: Leaving the EuroQE3 Coming? Price Could Hit $1 Trillion
“The reason that the ECB is not opening the flood gates to buy sovereign bonds in unlimited amounts is due to what happened in the United States,” Bove said. “In this country, once the Federal Reserve made it known it would use quantitative easing to buy Treasury debt, the Congress abandoned any attempt to deal with U.S. deficit. The ECB has learned this lesson and is not letting European governments slide back into their old habits. It wants some discipline.”
In exchange for the loans, European banks will have to sell equity and comply with stringent capital requirements.
“European banks must sell equity and buy sovereign debt. They will be forced by these parameters to abandon private sector offerings and private sector clients,” Bove said. “The clients that will be the first to go will be those outside each bank’s country.”
Similarly, Bove sees two possible solutions coming to address the complications brought about because the widely disparate European nations must abide by the rules of the same currency.
He predicts a possible “pseudo-euro” of lower quality issued to heavily indebted countries, which then can default on their obligations and devalue their currencies in order to cheapen their debt.
In the second case, he sees “partial nationalization” as governments purchase stakes in the European banks, in much the same way the US government took positions in Wall Street’s largest financial players.
“This program may actually start today with a Commerzbank sale of stock to the German government,” Bove said. “The problem with this approach is that the private sector is starved for funds and this causes a significant recession of greater than normal longevity.”
For Bove, all of the scenarios point towards opportunities for US banks, which have gotten clobbered this year over concerns that the European crisis will spread across the Atlantic and infect the American financial system. He said the situation will be much like the 1990s when US banks took clients from failing Japanese institutions.
“This is not a phenomenon that will begin; it began months ago,” he said. “The fear of contagion is a myth. The ability to gain market share is reality.”
Source: December 13, 2011 2011 CNBC.com
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, US Economy | Leave a Comment
NEW YORK – December is the month for stock market gains. But a Santa Claus rally on Wall Street is not gift-wrapped, with Europe’s debt crisis and political gridlock in the USA acting as potential Scrooge-like downers.
December has long been the seasonal champ in stock performance, S & P Capital IQ says. It’s been No. 1 since World War II. It has topped the charts since 1970, the year Simon & Garfunkel’s tune Bridge Over Troubled Water was the best-selling song. It’s been tops since 1990, when anti-apartheid leader Nelson Mandela was released from prison.
Since 1990, stocks have finished higher 81% of the time in December, vs. an average of 61% for all months.
“They don’t say ‘It’s the Most Wonderful Time of the Year’ for no reason, right?” Paul Hickey of Bespoke Investment Group said in a note to clients.
December gains would be pretty much guaranteed again this year, if not for the chance of Europe imploding and causing financial mayhem similar to the U.S. crisis in 2008 triggered by Lehman Bros.’ collapse.
On the bullish side, better-than-expected economic data lately have lowered the odds of a U.S. recession. Black Friday and Cyber Monday retail sales were strong. The latest readings on leading indicators and existing home sales topped forecasts. Consumer confidence also rose this month, the Conference Board said Tuesday.
“Will December seasonality be overshadowed by Europe? That’s the question,” says Pat Adams, Dunham Loss Averse fund portfolio manager.
There are risks, given the “unprecedented times” we’re living in, says Sam Stovall, chief equity strategist at S&P.
•Headline risk: “The market is being held hostage to headlines,” says Stovall. Investors are likely to sell if news from Europe suggests financial contagion can’t be avoided and policymakers are unwilling or unable to stem the crisis.
•Political risk: Legislative gridlock in the U.S. could also rock markets after the deficit-cutting supercommittee’s failure this month to come up with cuts of $1.2 trillion over 10 years. If lawmakers don’t extend the payroll tax cut or unemployment benefits by the end of the year, it could crimp growth and spark selling.
Adams thinks the stocks would be “a lot higher if Europe was not in the way.” He points to a market selling at attractive levels, an economy showing signs of life and pessimism about the outlook, which normally equates to a buying opportunity.
Source: USA Today, November 29, 2011
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, US Economy | Leave a Comment
Record profits. So what?
Corporate profits are about to rise to a record. Again. With nearly 92 percent of companies in the S & P 500 reporting third-quarter earnings, they’re on track for a total of $23.78 per share. That would top last quarter’s record of $22.24 per share, according to S & P Indices.
The last time profits were that high was in the second quarter of 2007, when they peaked at $21.88 per share, before the recession.
Earnings are rising because the U.S. economy grew more strongly than expected last quarter, says Citi economist Steven Wieting. China and other developing countries also keep growing.
Consider Intel. It earned a record $3.5 billion in the third quarter after stronger sales of notebook PC chips raised revenue by 29 percent. Tempur-Pedic International made a record $61.9 million as mattress and pillow salew grew around the world.
But although profits are at their highest levels, stock prices are not. The S & P 500 is still 21 percent below its closing high of 1,565.15 set on Oct. 9, 2001, as of Thursday.
That’s because investors are worried about Europe’s debt crisis. They’re also concerned about the U.S., where the unemployment rate has been at least 9 percent since April.
But financial analysts expect profits to keep rising. They forecast S & P 500 profit growth of 15 percent in the fourth quarter from the previous year, according to FactSet.
“This remains the strongest corporate earnings recovery on record,” says Linda Duessel, stock strategist at Federated Investors. And investor demand for stocks over the long term depends on corpare earnings.
Source: Oregonian, Saturday, November 12, 2011; FactSet
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
Bullish Again
Individual investors are feeling better about stocks after the market’s October comeback.
About 40 percent say they’re optimistic about how stocks will do over the next six months, according to a survey by the American Association of individual investors. In late September, 25 percent of investors were bullish. The average since 1987 is 39 percent.
The S & P 500 hit its low point for the year on Oct. 4, when it briefly went into bear market territory. Since then, the index is up 19 percent. U.S. economic news has gotten better. Europe has made progress on resolving its debt crisis. The U.S. job market improved slightly from July to October. And companies are reporting strong earnings. Third-quarter profits for the S & P 500 are expected to reach a record $23.78 per share. That would be up 7 percent from the second quarter.
Investors are still pulling money out of stock mutual funds, which they’ve been doing since May. But the pace has slowed. Investors withdrew $3.2 billion during the week of Oct. 26, down from $3.5 billion a week earlier and $5.8 billion two weeks earlier.
Sources: American Associatin of Individual Investors, Investment Company Institute, FactSet, The Oregonian, November 9, 2011
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
Top 10 Reasons to Own Stocks
10. $2.6 trillion in money market funds earning nothing and losing purchasing power by the day.
9. After 30 years, the bull market in bonds is over.
8. Stocks are under owned. The new alternative investment in long only equity.
7. Stocks are driven by earnings. Despite the fact that we all fell terrible, earnings are at record levels and climbing even with 9% unemployment.
6. Inflation is a bigger long term threat than deflation and stocks do preserve purchasing power.
5. Stocks are cheap with lowest PE ratios since 1991 when treasuries yielded 8%, and the equity risk premium is at an all time high.
4. Sentiment is very bearish, which of course is bullish. Investors are fearful like 2009 but it is not our economy that is under assault at this time.
3. With record low interest rates there is a shortage of investment income and retiring baby boomers will buy stocks for dividends.
2. Don’t fight the Fed-not just our Fed. The ECB cut rates today. A new global easing cycle is beginning.
1. There will be an election in 12 months and it will be about the role of gobernment. We will not become more like Europe. We will get our fiscal house in order and the stock market will celebrate that.
Source: Howard Ward spoka at the Morning General Session for the Schwab IMPACT 2011 Conference in San Francisco and presented the above. Gabelli Funds, LLC
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
For years, employers have been replacing traditional pensions with worker-directed, 401(k)-like plans, placing the cost and responsibility of retirement saving firmly in our hands.
Yet many shied away from offering workers advice on how to invest their money, partly out of fear of being sued if participants were unhappy with the outcomes.
Late last month, federal regulators finalized steps aimed at getting rid of those excuses. The U.S. Department of Labor amended federal rules to make investment advice more available to 401(k) participants.
The move is part of an ongoing effort to improve 401(k)-like plans, the key retirement vehicle for nearly half of America’s workforce. But it’s still up to your employer to make advice available in your office. You could end up paying extra for it. And it’s still ultimately on you to seek out help and follow through.
Don’t you already get mailings, websites and occasional seminars about your plan? The ones touting the virtues of diversification, maxing out your employer’s match and using active versus passive funds?
That’s technically considered investor education — general vanilla info that applies to all investors. This rule change covers more specific advice tailored to your age, needs, savings rate and appetite for risk.
You’d think advice would come with the 401(k) account. Often, it doesn’t.
In some cases, plan sponsors flirted with violating the federal Employee Retirement Income Security Act. Part of that law tries to protect workers from falling victim to conflicts of interest among the parties managing the plan.
For instance, some plan sponsors get a cut of revenue from certain mutual funds in the plan. If that sponsor’s adviser recommends those funds over others, it’s not clear they have the worker’s best interests in mind.
This new rule gives plan providers two ways to get around that part of the Act.
First, they can provide advice based on an unbiased, regularly audited computer model.
Second, they can show that their income doesn’t change based on the funds they recommend. The fees must be disclosed and the arrangement regularly audited by an outside party.
“The lines now are very bright rather than very hazy,” said Francis Vitagliano, a visiting scholar at the Center for Retirement Research at Boston College who spent his career designing retirement plans. “As a result of that, we’re going to see more advisers willing to give advice.”
Many big names in the financial services industry — Fidelity, Morningstar and Vanguard — already offer or make available such computerized solutions to employers who choose to pay for it. I highlighted a couple of them in a column early this year.
But not all of you are hip on taking direction from a machine. You probably shouldn’t be, either.
Of course, cost is an issue. Scott Schiele, a retirement-plan consultant at Mercer in Portland, says participants might have to pay for the advice themselves. If so, I fear, many of you won’t seek it.
It’d be better if employers and plan providers realize that by offering more advice, they’ll improve worker savings habits and grow the money in the plan, which, under most plan designs, generates more income for them.
Then there’s employee retention. Preisz Associates Inc., which offers planning advice to 90 small retirement plans, works with a handful of employers that actually require their workers to attend one-on-one meetings each year with a Preisz financial planner or adviser.
“They look at it as a way to differentiate their firms from their competitors,” says Tom Davenport, retirement plan service manager for the Portland firm. “There are employers out there that realize how valuable human capital is, and they’re trying to do the right thing.”
The bigger point: Consider getting some advice, whether your employer offers it or not. Most of us are prone to investing missteps, from diversifying poorly to panic or inaction, either of which can be harmful at any given point.
The Labor Department estimates that such mistakes cost retirement plan investors more than $114 billion in 2010, foregone income that only compounds as workers near retirement. The new rules, the department says, could reduce those mistakes by at least $7 billion a year.
Whether you believe that savings estimate or not, studies show that when 401k participants get some level of investment advice, their contribution rates go up and, overall, their investment performance improves, Vitagliano and others say.
“It has, in other words, a calming effect.” said Rick Meigs, president of 401khelpcenter.com, a Portland-based research and consulting service.
These rules are a good attempt at removing many of the last excuses your employer has given for not offering one-on-one help more explicitly.
Which is to say you might also have to nudge your employer to provide the advice.
Source:
Published: Saturday, November 05, 2011, 7:00 AM Updated: Saturday, November 05, 2011, 12:05 PM
By Brent Hunsberger, The Oregonian
“They need to be asking their employer to provide something,” Meigs said. “There are no issues now other than potentially costs for employers not to provide some level of advice. And we desperately need it.”
– Brent Hunsberger welcomes questions about his column or blog. Reach him at 503-221-8359. Follow It’s Only Money on Facebook, Google+ or Twitter.
Related topics: 401(k), 401k, erisa, retirement, savings
Filed under: 401k, Investors, Ron Sloy, Ron Sloy Videos, Ronald J. Sloy, Ronald Sloy, Sloy Dahl & Holst Inc, Stock Market, Testimonials, US Economy | Leave a Comment
- See Photos of Ron Sloy
