Dick Bove, the closely watched bank analyst and vice president of equity research at Rafferty Capital said that right now, investors should be buying financial stocks “very aggressively.”

Based on historical valuations, he said, some of the biggest names in the sector will more than double.

“What you’re beginning to see is that all of this negativity—which has been pounding at these stocks for three to four years—is starting to lift because people are starting to realize that if you get through all the negative statements about the industry, the industry is making a staggering amount of money,” Bove said.

(Related: Relax, interest rates are not too low)

Bove listed several reasons for his bullishness on the sector: The U.S. banking industry is on pace for record profits in 2013, with low loan-to-deposit ratios, reduced loan-loss ratios, fewer bad loans, rising earnings quarter-over-quarter and “massive” historic over-capitalization.

“They are so liquid that their earnings are being negatively impacted by it,” he said. “The only thing that can harm the banks right here is some weakness in the economy. Lacking that, bank stocks are very, very cheap.”

(Related: Hedge funds are back: 70% see positive July returns)

He also said that going by historical valuation, “it is not very difficult for a bank stock in normal times to sell at two times book value. There are virtually no banks in the United States selling at two times book value.”

Names including SunTrust, Regions Financial, Morgan Stanley, Citigroup and Bank of America are selling at discounts to book value, he said. “There are no banks in the United States that will be selling at discounts to book value six to 12 months from now.”

Bove predicted that both Citigroup and Bank of America “will at least get 100 percent higher than they are right now. … Now that’s not going to happen in the next 12 months;it may not happen in the next 18 months, but it is going to happen.”

(Related: Almost everyone is misreading Fed’s new QE study)
Citigroup has gone through significant structural change, Bove said, and “could easily do 100 percent from the current level.”

With a rapidly appreciating sector—the XLF has risen over 35 percent in the past 12 months—investors can expect to see pauses and pullbacks, but these moves down represent buying opportunities, he said.

(More investing: ‘Less bad’ European markets will outperform US: Bob Doll)

“Remember, these stocks are not coming from normal levels,” Bove added. “They’re coming from highly depressed levels. Therefore, they’re just getting back to normal levels of valuation.”

—By CNBC’s Paul Toscano. Follow him on Twitter and get the latest stories from “Squawk on the Street” @ToscanoPaul
Published: Tuesday, 13 Aug 2013 | 11:45 AM ET

Learn more about Ron Sloy.

For the past year, nothing seems to be going the way of Apple (AAPL) shareholders. There have been countless articles discussing whether or not Apple can ever make a comeback, or whether or not they will succeed without Steve Jobs as CEO. The rest of the market has performed well, but what was once the market’s favorite stock, is now down over 20% YTD. Unfortunately, the conference call several months ago with Tim Cook did not seem to have as much of a positive effect on the stock as Apple was hoping for.

Latest Developments

Things may finally be looking up for Apple nevertheless. According to a recent article in Forbes, Apple may finally have a game changer for TV. Tim Cook has been quoted as saying “The TV has been left behind” in regards to innovation. This is especially true when comparing the progression of television to other technologies. The functionality of the TV has stayed relatively the same for decades, leaving an opportunity available to innovators. Tim Cook has also stated “Our whole role in life is to give you something you didn’t know you wanted. And then once you get it, you can’t imagine your life without it.…And you can count on Apple doing that.” Let’s hope Apple finally gets back to doing just that.

1.) Apple’s latest patent application leads us to believe that Apple TV will get a large redesign in the latest model. The patent states that Apple is developing a remote control “wand” with a fingerprint sensor. The importance of the fingerprint sensor for users of Apple TV will be the ability to be able to authenticate parental controls and buying controls. Parent’s or authorized user’s fingerprints will be instantly recognized for access to certain programming or for buying movies and TV shows. This technology has also been rumored as a potential new feature to the next iPhone.

2.) The iWatch is something that has also been speculated about greatly. There has been confirmation that Apple did file a trademark in Japan, Russia, Mexico, and others. Apple’s patent describes how “With a touch screen user input a user can accomplish a number of different tasks including adjusting the order of a current playlist, and reviewing a list of recent phone calls. A response to a current text message can even be managed given a simple virtual keyboard configuration across the face of the flexible display.”

3.) Tim Cook has recently hired Paul Devene, who is the former CEO of luxury brand Yves Saint Laurent. Devene’s role has been loosely described as “special projects” by Apple, but speculation lies around the iWatch product release. Devene has a history of success in marketing luxury items, and that is exactly what Apple needs. This hiring could also mean that Apple is looking to get back to an exclusive luxury image, which it has lost to some extent since the passing of the late Steve Jobs.

4.) Tim Cook has recently held a meeting to announce his displeasure in the amount of iPhone sales that are taking place from inside Apple retail stores. Cook reportedly stated that too many sales are occurring in outside locations, which decreases the amount of cross selling that may have occurred if the consumer was shopping inside the Apple store. Incentives for getting consumers into Apple stores may be in the works.Speculation of a lower priced MacBook Air has also been discussed. Apple could remove Intel as the processor for their MacBook Air, and use chips manufactured in house. They could lower the price point of their already successful MacBook Air in order to reach even more consumers. MacBook Air already has 56% of the ultra-thin laptop market share.

The greatest catalyst of all is Apple’s secrecy. The ideal situation for Apple investors is a new product that no one even knows is coming. Time will tell for Apple.

Don’t Sell Yet…

1.) Buybacks- A few months ago Apple announced share buybacks on their conference call with Tim Cook. The buybacks haven’t currently had a major effect on the price of the stock yet, but over time it will. Buybacks are the sign of a solid, confident company with shareholder friendly management. As the number of shares decrease, naturally the price of each outstanding share should increase.

2.) Dividend- Apple’s dividend yield continued to increase as the share price tumbled down to $400 a share. On April 23, 2013 Apple announced a 15% increase in the dividend payout, which equates to a cash value of $3.05 per share. Companies that continually increase dividend payouts and have large amounts of cash are typically great investments for the long term. The safety level of Apple’s dividend is high, thanks to Apple’s large cash position.

3.) History- Apple was once the most popular and favorite stock on Wall Street, making it one of the decade’s most compelling success stories. Shares rose 100x from September 2002 through September 2012. Products like the iPhone and iPad broke sales records consistently, and analysts even predicted that Apple would be over $1000 a share. The Apple brand is still something that is envied by many, and remains a very powerful asset for the company.

But What About….?

1.) Competition- The market that Apple’s products and services lie in are extremely competitive. Markets are often characterized by frequent product innovations and technological advances that can add new features and make current products seem obsolete. Price competition from rivals like Google (GOOG) has hurt Apple, particularly in the Smartphone market. Apple first released the iPhone six years ago, and the iPad is now three years old. This lapse in time between major innovations allows the competition to respond and develop similar devices. Even Apple’s “refreshed” versions of the products are not enough to keep competitors at bay. With such fierce competition on similar products, the high prices that Apple have enjoyed and made Apple so profitable are more difficult to justify. Its latest earnings report showed that Apple’s wide margins have begun to narrow.

2.) Innovation- Innovation for Apple has been no where near where it was during the Steve Jobs CEO tenure. “Refreshed” versions of current products have not been enough to spur enough growth in sales to move the stock. Apple needs another game changer that tells the public what they want, and leaves other companies rushing in an attempt to try and catch up. iPod, iPhone, and iPad were all successful in this respect.

3.) Global Markets- There has been speculation that Apple will be releasing a lower priced iPhone model, particularly to cater to emerging markets. The success or failure of launching the iPhone and iPad in these developing countries will have a huge influence on whether or not Apple’s stock rallies. Apple is faced by aggressive price cutting and frequent innovation in alternative global markets, making it more difficult for their current products to compete. Apple’s success in the global economy depends heavily on its ability to ensure timely production of new innovative technologies at prices competitive with Google and Samsung (SSNLF.PK). Apple has stated that their designs, reputation, and overall build quality will help them build a competitive advantage in their respective markets, while their competition focuses solely on pricing. Products that imitate Apple’s functionality and innovation but undercut Apple’s prices are a huge problem for Apple right now.

With such fast growth in the past, Apple has now reached a tremendous size, which limits continued exponential growth. Apple had consistently doubled their sales and earnings, but this is a feat that can only be done a certain number of times before it becomes very difficult to double such a large amount. Expansion becomes much more difficult when you must create hundreds of billions of dollars in new sales in one year, while Apple was used to doubling revenues numbers in the millions. Considering price movements in stocks are largely based on revenues and earnings, the stock was bound to slow down.

Profit takers are also another factor that has hurt Apple. Many people who got into Apple early have since taken their profits. Not to mention, as Apple’s returns continued to grow, Apple became a disproportionately large portion of many people’s portfolios. With too much exposure to one company, a portfolio becomes riskier. In order to balance a portfolio in this condition out, Apple shares would have to be trimmed.

I think the days of unbelievable growth for Apple are more than likely over. Steve Jobs was the visionary and such an intricate part of why Apple was such a great success. History shows that when Apple ousted their founder in 1985, the company performed very poorly. After re-hiring Steve, Apple began to outperform. Steve Jobs did however recommend Tim Cook as his successor, and I think Cook has potential to do great things with Apple. This information alone is not enough to label the stock untouchable.

Financially, the stock is dirt cheap

Financially speaking Apple is in excellent standing. Apple trades at a P/E of just 9.97 compared to an industry average of 16. Apple’s relative P/E ratio (PEG ratio) is about .62, which shows that Apple is trading a multiple nearly half its growth rate. Both revenues and earnings per share have been steadily increasing year over year. Apple’s dividend yield of 2.92% is also higher than the industry average of just 2.24%. Return on equity for Apple is nearly 40%, compared to an industry average of just 16.87%. Financial ratios show that Apple is highly undervalued when compared to its industry competitors. Considering Apple was once, and arguably still is the best of the breed company in the industry, these comparisons make Apple seem largely oversold.

Unseen Markets

For a different perspective, there are still many options available for Apple that no one has discussed. There is always the possibility that Apple will make an attempt to get into the gaming industry again. Their failed Apple Bandai Pippin was discontinued in 1997, but this may be a market that Apple decides to enter again. Apple had attempted tablets long before the iPad was released with little success, so it’s possible Apple makes a comeback attempt in the gaming industry as well. Competitors would include Sony (ADR) PlayStation and Microsoft (MSFT) Xbox, but portable gaming controllers that connect directly to your iPhone or iPad could give Apple a competitive advantage.

The possibility for Smartphone integration throughout your entire house is another untapped market by Apple. I’m not referring to using your iPhone as a remote control for your iTunes or your Apple TV (which is currently available to consumers), but using your iPhone and iPad to check the status of your laundry, or to view recipes on the stove as you cook. This allows consumers to bring all of your home electronics together with simple integration across all appliances and consumer technologies.

This is merely speculation, but it is always interesting to try and predict what Apple may come up with next.

Time to Pull the Trigger?

Apple certainly doesn’t have it easy from here, but the picture isn’t as bleak as many people paint it. Apple’s products are still widely used and sought after, and the App Store and iTunes are two of the best and widest used digital marketplaces in the world. The balance sheet’s cash position is incredible, standing at about $143 billion. In addition, the stock did see growth every year from 2003 until 2012, and revenues during the same time period jumped from $6 billion to over $180 billion.

CNBC reported on Monday that Apple may finally be at the bottom. “Among the reasons Apple fans say to buy the stock now: a record-breaking stock buyback program, an amazing valuation, a technical breakout in the stock chart and a ramp-up in the current uninspiring product cycle. Plus, Chief Executive Tim Cook is finally stepping out of Steve Jobs’ shadow.” CNBC analysts are predicting Apple to be over $500 a share before the end of the summer. Forbes published a similar article on the same day, highlighting that Apple’s main competitors – Samsung and HTC have reported lower than expecting earningsEven hedge funds and large institutional buyers are getting back into Apple, the valuation and potential new products make it too good to ignore. Technical analysis above shows a head and shoulders pattern for the stock, which could ultimately lead to a breakout up towards $500 a share.

Whether or not to pull the trigger on Apple ultimately depends on your risk tolerance. I think Apple may be on the right path, and definitely has some surprises in the works that should be announced soon. Valuation and balance sheet are too good to ignore, and history has shown that buying a good company during a bad time has proven profitable.


Apple is a tricky stock to consider investing in. Fellow Seeking Alpha writer Ashraf Eassa thinks that Apple stock is “dead money” and should be avoided. However, he also states that Apple’s outstanding cash position and current product line should be sustainable for Apple in the coming years. Personally, I agree. The dividend, share buybacks, excellent cash position and current product offerings are all strengths for the stock. New products and emerging market growth are the two largest catalysts for Apple, which make it an investment based on conviction. Many analysts rate Apple a “Buy”, but I am on the fence between a buy and a hold. Investors have adjusted to a life without Steve Jobs however, and new product cycles and incredible valuation make the stock appealing again. Tim Cook has been incredibly confident and enthusiastic about what is to come for Apple, and if his predictions are correct, Apple should be a great stock to own.

This article is for information only, and is not to be considered advice to buy or sell a particular stock.

Source: Seeking Alpha July 9, 2013

Learn more about Ron Sloy.

Even as U.S. stock indexes hit all-time highs, Warren Buffett predicts they’ll go “far higher” in the long run.

Right now, he very much favors equities over bonds, warning some investors could lose a lot of money in long-term fixed-income assets when interest rates eventually start to rise.

In a live appearance on CNBC’s Squawk Box Monday morning, Buffett told Becky Quick, “You’ll see (stock) numbers a lot higher than this in your lifetime.”

(Read More: CNBC Transcript: Buffett and Gates on ‘Squawk Box’)

Acknowledging that milestones like Dow 15,000 can draw Main Street’s attention to stocks, Buffett said people should pay more attention when indexes cross those milestones on the way down because that’s when stocks are “cheaper” and more attractive to buy.

While not as “cheap” as they were a few years ago, Buffett thinks stocks are now “reasonably priced” and not “ridiculously” high.
There could be a pullback for stocks at any time, Buffett said, but warned against attempts to time the market. “People pay way too much attention to the short term.”
(Read more: Buffett: ‘Shot Heard Around the World’ Coming)

Buffett said that bonds are a “terrible” investment right now because they are “priced artificially” high due to the Federal Reserve’s massive asset buying program and could lose people a lot of money when inevitably interest rates start to rise. He doesn’t know when that will happen and he doesn’t know how much rates will rise, but he’s certain they will be going up eventually.
While he has bought bonds in the past under different circumstances, he generally prefers “productive” assets to fixed-income investments.

Buffett also warned that it’s “crazy” to get enticed into a risky investment because someone promises you a higher yield. “I can take you to the waterfront and they’ll promise you 15 percent,” he joked.

Buffett said he sees no major changes for the U.S. economy over the past four years. It continues to show “gradual improvement … moving forward, but at a slow pace.” From his viewpoint, “Demand has come back, but slowly.” He does see some “fairly strong” improvement in housing.
He called Fed Chairman Ben Bernanke a “gutsy guy” who has done “very, very well” keeping the economy on the right track. Buffett did concede he might have lifted his foot off the “accelerator pedal” earlier, but he’s not sure how to do that.
Buffett also endorsed JP Morgan Jamie Dimon as the bank’s CEO. Asked about efforts by some shareholders to split the chairman and CEO roles, Buffett said Dimon should keep both jobs.

(Read more: Buffett & Gates: All Online Retailers Should Collect State Sales Taxes)

He also said, however, there are times when it makes sense to separate the roles. “Either system is OK.” He also thinks directors should spend some time talking without the CEO present, recalling that he’s been on one board where “a lot of change happened” after the CEO left the room.

Buffett said each year when the Berkshire board meets, he gives them a chance to talk without him there.
Among other topics covered by Buffett during the interview:

Buffett revealed that Berkshire has been buying some stocks and companies in the past year. He said Europe “is going to be around” and its economic problems present a buying opportunity.
Buffett said he’s still bullish on Wells Fargo. Berkshire has bought some additional shares almost every month this year.
He wouldn’t say why Berkshire recently sold a small chunk of its Moody’s stake, but noted the sale price was six times what it had paid.
Even though it’s been buying newspapers in small and medium-sized cities, Berkshire probably won’t be investing in media companies because it is hard to know which ones will be successful in 10 years.
He thinks JC Penney has a “very tough” road to recovery after it “alienated a significant portion” of its customers, but has “good management.” While he doesn’t have an investment in the retailer, he is rooting for it to recover.
Buffett said government isn’t solely responsible for rising health care costs, “it’s the whole system.”

CNBC: Monday, 6 May 2013 | 6:41 AM ET | By: Alex Crippen

Learn more about Ron Sloy.

At $390, Apple has dropped over 25% this year shaking the confidence of even the most ardent Apple shareholders. At times like these, I find that it helps to pay attention to managers who have made a lot of money in the stock because they generally have made the right decisions in the past after similar pull backs. When it comes to Apple, Eugene Groysman is the Marketocracy Master I look to.

Eugene runs a core portfolio for our clients in which he uses fundamental analysis to find companies in every sector that offer above average risk/reward profiles. This enables his portfolio to be diversified across sectors while avoiding the worst companies in each sector. Since May 9, 2003 — almost 10 years — his model portfolio has averaged 18.1% a year while the S&P 500 has averaged 7.4%.

Not only has Eugene done well overall, more importantly, he has done well with Apple. In October of 2010, he was buying Apple at about $245 because he thought the iPad could push the stock to $300. In November of 2011, when Apple was trading at $380, he told Forbes readers Apple Could Reach $500 In 2012. He’s been right about Apple more than once. Lets see what he thinks about the stock now.
Ken: Eugene, over the past few years, you’ve made a lot of money in Apple. But, in the most recent quarter, Apple’s stock has performed badly. I noticed you sold some early in the year when the stock was around $480. Why did you sell?

Eugene: I did sell Apple, but not because I still don’t see an upside. It had become extremely over weighted and it was causing major oscillations in the overall portfolio. As this was happening outside of my control, I decided I needed to reduce its impact on the overall portfolio.

Ken: What do you see that the market is missing?

Eugene: In my opinion the market misses a few big points on Apple. I looked at the stock from a quantitative and qualitative point of view.

From a quantitative point of view, the market ignores three very big facts about Apple.

It carries zero debt. For a company that size its incredible
Its return on equity (ROE) is about 38%
Its shareholder value is over $130billion.
Using a free cash flow model, the company could be worth over $1.4 trillion — over $1500/share.

On the qualitative side, none of the valuation takes into account new products being developed. On the horizon, you have the iTv, iWatch, and new variations on the iPhone. There is the 5s, and there is a lot of discussion of a cheaper version of the iPhone 5 that uses less expensive material that would have a lower price point. This option is being developed for possible launch with China Mobil (NYSE:CHL), the world’s largest cell carrier.

Ken: I take it you are bullish on Apple even after this quarter’s poor stock performance?

Eugene: I am still bullish on Apple and it is one my largest positions right now.

Ken: Thank you Eugene.

For additional investment insight and to converse directly with the Marketocracy Masters and the Warren Buffets Next Door, join Ken Kam’s group on LinkedIn or sign up for our free e-mail list.

Disclosure: I am the portfolio manager for mutual and hedge funds advised by Marketocracy Capital Management, an SEC registered investment advisor. Before relying on the opinions expressed in this article, you should assume that Marketocracy, its affiliates, clients, and I have material financial interests in these stocks and may hold or trade them contrary to these opinions when, in our view, market conditions change.

Source: Forbes – Ken Kam, Contributor – April 21, 2013

Learn more about Ron Sloy.

Forbes Dividend Investor subscribers received this hotline on March 13:

Apple has certainly had a storied history as a cult brand, a company that went to the brink of extinction, and a monster stock once Steve Jobs returned to the company he co-founded and executed a turnaround for the ages.
A decade of new product hits including the iPod, iPhone and iPad revolutionized music listening, cell phones and mobile computing and fueled a spectacular run of nearly 10,000% in the stock from less than $7 split-adjusted in 2003 to its high last September of $705.

Over the past six months, however, the ubiquitous worship of Apple seems to have turned into universal disdain as the stock has tumbled 40% from its peak. To be sure, the chart is a portrait of ugliness, but with Apple trading around $430, the stock looks dirt cheap at present valuations compared to historical price multiples of sales, earnings and book value. Its price-sales ratio is 27% below its 3.5 average since 2008, and the discount to its five-year average price-to-book value ratio is 31%. Its present P/E is 49% less than average. Those are fat discounts for a company expected to grow sales by 16% this year.

In addition to looking especially lean on vauations, the 2.5% dividend yield adds a decent income kicker. Plus, with the biggest pile of corporate cash known to man, Apple can afford to hike its $2.65 quarterly payout in the future as it makes the transition from a growth rocket into a cash cow. Apple paid regular quarterly dividends from May 1987 until November 1995 when it eliminated the dividend to conserve cash.

The death of Steve Jobs in October 2011 and the rise of more formidable competition from Samsung and other Google Android phones and tablets strongly suggest that Apple’s future may not resemble its past several years. Nonetheless, with no debt and $56.7 billion in cash from operations over the past 12 months, it’s still a money-printing machine.
Apple’s current fiscal year ends September 30, and analysts expect it to earn $44.32 per share, just a few cents per share above teh $44.15 it earned last year. Wall Street expects sales to be up 16.4% to $182.2 billion. Apple reports results of the January-March quarter on April 23.

Dealing with a stock that has fallen so far can be like attempting to handle a wounded animal. Take care not to get bitten by Apple. At some point, the selling will be exhausted. Extremely oversold readings in stochastics and money flow two weeks ago make a credible case that perhaps the descent has been halted and a challenge of $450 is coming. Use a stop-loss a little tighter than usual, maybe 3%-4%, because if the selling resumes, a trip to $400 may not be far behind. At that point, however, the greater likelihood would be a massive bounce instead of further cratering and you would hate to sell at the bottom.

Source: Forbes – John Dobosz (Forbes Staff) 3/15/2013 @ 5:49PM

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The run in big bank stocks may not be over, say Wall Street analysts. And many are particularly positive on Bank of America and Citigroup this year.

“The group is putting up decent numbers, despite the fact you have more subdued economic growth and persistent low interest rates,” said Barclays bank analyst Jason Goldberg of the financial sector. “If we ever get the U.S. economy back working again to more desirable GDP growth and a little bit higher interest rates, I think there’s a fair amount of upside.”

While some banks are poised to fare better, others offer a better value. And then there’s one pick that noted banks analyst Meredith Whitney describes as a true growth company in financials.

Sector Upside, and Affordable

Goldman Sachs equity strategists agree with that view. The broker this week raised its recommended portfolio allocation for financials to “overweight” from “neutral,” telling investors the group will benefit from “accelerating GDP growth, rising interest rates and supportive equity markets.”

(Read more: Big US Banks Will Rise Further: Analyst)

Moreover, Goldman analysts estimate a 5 percent rise in home prices would increase bank 2013 earnings per share by 13 percent. “Strength in housing provides support to revenues until loan growth and net interest margins recover,” Goldman U.S. equity strategist David Kostin wrote in a research note.

While the financials sector has run up 17 percent during the past six months, outpacing an 8 percent advance for the S&P 500, the sector remains cheap. Goldman notes financials still trade 50 percent below the 2007 peak.

They are also one of the few investment ideas that will benefit as interest rates begin to rise, said Chris Leavy, BlackRock’s chief investment officer of US fundamental equity. “They’re good ideas in their own right and bring a real benefit to a portfolio,” he said.
Analyst Stock Ideas

But some big banks are poised to fare better than others from here.

Meredith Whitney prefers Bank of America coming out of the Federal Reserve stress tests. “What’s amazing about this is very rarely do these big banks have value, catalyst and momentum,” she told CNBC. “And Bank of America had all of that.”

(Read more: ‘You Have to Be Bullish,’ on US Stocks: Whitney)

The Fed’s decision to allow Bank of America to buyback $5 billion in stock may also be a positive read-through for Citigroup, UBS analyst Brennan Hawken said. “Next year Citi’s going to be in very similar position to BofA and they’ll be able to buyback a lot more than most people expect right now,” he said.

With BofA shares are up sharply over the past three months, Whitney sees another 20 percent upside from here. “The stress test was a huge catalyst for this name,” she said.

But Whitney stressed the call on BofA isn’t about a return to loan growth. “It’s all cost cutting,” she said. “It’s all operating leverage. I don’t have a lot of revenue growth expectations for the big banks in general.”

(Read More: The Safest Banks in Emerging Markets)

That’s one reason Credit Suisse analyst Moshe Orenbuch prefers Citigroup to Bank of America. “I think just general economic growth and the ability to grow loans and net interest income is going to be a tougher challenge for BofA,” he said. He also likes Citigroup for its emerging markets exposure.

And with a $12 price target, Orenbuch believes the good news is already priced into Bank of America shares. Plus, the stock trades at a premium to both Citi and JPMorgan on 2014 and 2015 earnings, he said.
But BlackRock’s Leavy likes Bank of America saying the bank’s earnings power will become more transparent as the servicing expenses tied to poor loans improves. Leavy is bullish on US Bancorp as well. He said the bank will continue to grow its loan book, and has a competitive advantage with its low expense ratio.

As for JPMorgan, Whitney said there may be less upside since it has less cost-cutting to do than some of their peers. She also said last week’s congressional hearing into its trading losses was ugly. “It reminded me of how bad it was seeing Goldman Sachs in the same position,” Whitney said. “It took a long time for Goldman to get over that. It will probably take a long time for JPMorgan to get over it.”
A Growth Stock in Financials?

While Whitney sees 20 percent upside on Bank of America, Discover Financial could do even better.

“There’s over 30 percent opportunity in Discover inside of this year,” she said, calling it one of the true growth companies in financials with more than 20 percent return on equity.

“Discover has been an unbelievable name largely because it is taking market share from a lot of the banks, but it’s also providing liquidity where the banks aren’t providing liquidity,” Whitney added.

Saying the company’s $20 billion market cap could probably double in the next two years, Whitney told CNBC, “It’s all guns blazing on this name.”

— By CNBC’s Justin Menza

Published: Sunday, 24 Mar 2013 | 12:32 AM ET

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Former General Electric CEO Jack Welch says Apple deserves better than the treatment it’s getting from David Einhorn, the hedge-fund manager pressuring the iPhone maker to cough up dividends.

“Look, these guys are after a quick hit. I’d blow him off,” he told CNBC’s “Closing Bell.” “I’d give Einhorn the back of my hand.”
Welch said he had the same kind of problem with activist investors while heading GE. “They’d come after us, ‘What are you going to do with all that cash?’ Well, we’re going to do a smart thing! Trust us!” Welch said.

Apple is in a vicious technology war with rivals big and small, and Welch said he thinks CEO Tim Cook should be given the space to run the company.

“He’s got Samsung and everyone nipping at his heels. And he risks running, rather than a sexy company, a commodities company.”

He said Apple needs to have the cash and the flexibility to move on an acquisition in a turbulent market.

“Apple deserves, after all they’ve done, a chance to deliver on all their promises,” he said.
Welch also took some shots at the White House, saying the U.S. energy boom has the potential to power another “American Century” of economic dominance, if it weren’t for the administration’s heavy-handed regulations.

“We can’t keep throwing sand in the gears of the economy,” he said.

Welch said the cost of regulation under President Barack Obama is three-and
-a-half times that of Bill Clinton’s administration’s first term and five times that of George W. Bush. And that’s not counting Obamacare, he said.

The economy now is being buoyed by $85 billion from the Federal Reserve each month, but the downward pressure from regulation, he said, is “enormous.”

He described the situation as a “regulatory morass.”

“That is holding back this economy from really taking off,” he said. “All the conditions are right to take off, if the regulatory burden could be taken down.”

Welch was at GE’s helm from 1981 to 2001, during which the company’s value rose 4000 percent. In 2009, he launched the Jack Welch Management Institute, which is now part of Strayer University.
Correction: An earlier version of this article stated that the Jack Welch Institute is part of Chancellor University. It was acquired by Strayer University in 2011.

Source: Published: Thursday, 7 Mar 2013 | 4:20 PM ET | CNBC

Learn more about Ron Sloy.

As the Federal Reserve conducts its two-part stress test over the next week, veteran bank analyst Richard Bove continues to be bullish on the banking sector and sees bank stocks going “substantially higher” when the tests conclude.

Bove expects that across the board banks will raise dividends and said that this type of action is exactly what investors want to see.

“Quite frankly, the banking industry across the board is doing extraordinarily well,” Bove told CNBC’s “Squawk on the Street” Thursday. “If you look at some of the core statistics, for 14 quarters bank earnings have been up year-over-year in every quarter. In 2012, the industry had a 19 percent increase in earnings and it was the second best year in the banking industry in the United States.”

“In the first quarter of 2013, the banking industry will make more money than in any quarter in the history of American banking,” he said. “You have so much excess capital in the banking industry at the present time that you have to go back to 1938 to find a year in which the percentage of capital to assets was as high as it is now.”

Late on Thursday, the Federal Reserve is expected to reveal how much capital 18 large banks would maintain under a hypothetical severe economic downturn. A week later, the agency plans to disclose how the banks would have fared if they had first spent some of their capital buying back shares or paying higher dividends.

Investors in U.S. bank stocks are expecting volatility in the interim as the process is spread out. Last year, the Fed disclosed all of the information on the same day.

Bove is focused on the second half of the stress tests next Thursday, which he said will reveal the names that will pay the larger relative increases in dividends.

“They’re all going to show increases in dividends and the percentage increases could be very big in some cases,” he said, although in some names, like Bank of America, even a 50 percent increase in the dividend would be “meaningless” because the resulting dividend would still be relatively low, he added.

“What you’re looking for in names like Citigroup and Bank of America is some increase in dividends to certify that the Federal Reserve is not unhappy with them,” he said. Bove pointed to regional names such as US Bancorp that have a potential for a meaningful increase in dividends as well as Wells Fargo, which Bove thinks could also have a “nice increase” in dividends after the stress tests.

Published: Thursday, 7 Mar 2013 | 10:42 AM ET By: Paul Toscano
Producer, CNBC.com

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Having been beaten, bludgeoned and brutalized over the past 6-7 months, Apple Computer (AAPL) has been the subject of a wide array of metaphors, similes and analogies that speak to the historic collapse of its stock which dropped 36% off its high, and wiped out around $225 billion in market cap. On the short term, the stock has closed down 8 out of the last 10 trading days, and remains well below its critical moving averages.

On February 5th, I wrote an SA article about AAPL entitled AAPL: New Analysis Offers Reasons For A Rally wherein I suggested there was a change in investor sentiment toward the stock. I opined that investor “focus” toward it had changed, and that “new” focus was to look for reasons for AAPL to rally, instead of continuing its decline. Furthermore, I suggested that this new focus was in its very early stage, and investors were looking for a catalyst that would kick off a rally.

My viewpoint hasn’t changed, but the following metaphor brings a new theory to the table: Buy the steak, and hold AAPL for the coming sizzles. In my opinion, and considering all of its metrics, the AAPL “steak” is fat, juicy and it’s the very best that one can buy. When the sizzle comes back, which could be in the very near future, I expect the price will more than double. With respect to the “sizzle” coming back, there are a number of possibilities that could light AAPL’s fire in the near future and move the stock to new highs.

Sizzle # 1 – The Apple Watch – Could Generate $10 to $15 Billion in Sales

Rumors have been swirling regarding the progress being made on the so-called Apple Watch. The rumors have included the fact that AAPL has a 100 person team working on the project and that Foxconn (FXCOF.OB), AAPL’s manufacturing partner, has been in active discussions with AAPL regarding the project.

Recently, fuel was added to the fire when”AppleInsider” reported its recent discovery of a patent application filed by AAPL in August, 2011. The device described in the patent application sounds incredibly like the touch screen smart watch the company has been rumored to have in its pipeline, and was designed to use Corning’s flexible Willow Glass.

According to “AppleInsider,” the Patent Application describes “a wearable accessory that has a flexible touch screen display and uses a ‘slap bracelet’ mechanism to conform to the user’s arm. The device, consists of a Bi-stable spring with flexible display, connects to a phone or another mobile device through Bluetooth and Wi-Fi.”

“The accessory can turn into an uninterrupted screen when in its “curled state,” with gyroscopes and accelerometers orienting the screen toward the user.”

“With a touch screen user input, a user can accomplish a number of different tasks including adjusting the order of a current playlist, and reviewing a list of recent phone calls, or responses to a text message can even be managed given a simple virtual keyboard configuration across the face of the flexible display.”

There are other companies toying with miniature gadgets in R&D programs such as Google’s (GOOG) “Project Glass.” This item will purportedly be an “eyewear” device which is referred to as a “Head Mounted Display” that will project information in a smartphone-like format and will function in natural language voice commands. While its a very interesting concept, it would seem to me that consumers would be more attracted to AAPL’s comfortable and attractive wrist band that does just about anything, compared to having a mini computer hanging over one’s face.

Since well informed pundits and analysts are already making financial projections relating to the Apple Watch, I would conclude that its launch is not too far away. For example,Katy Huberty, Morgan Stanley analyst, recently wrote in a note to clients that the Apple Watch would generate between $10 billion and $15 billion in annual revenue for AAPL, which would yield between $2.50 and $4.00 in yearly profit per share.

Sizzle #2 Apple TV – Multiple Components of “Disruptive Innovation”

Harvard Business School professor Clayton Christensen, the architect of, and the world’s foremost authority on “disruptive innovation” sent out a number of tweets last week stating that AAPL’s app-enabled television could be the biggest disruption in the video game space since the Wii enlarged the market, and the video gaming potential is just one reason for consumers to buy the product.

A second component of Apple TV could be another first for AAPL: The power to fix the archaic living room infrastructure that contains multiple remote controls for multiple devices that are unable to communicate with one another. I believe that most everyone would agree that it’s irritating and archaic that at least three remotes are required to turn on a television, the cable/satellite and the sound system. I believe that a single consumer friendly device that would satisfy all functions would likely be embraced by a large percent of the population! Personally, I’d buy it immediately. Such a device would serve as a catalyst for AAPL’s growth trajectory, and it would likely have a relatively long term product cycle.

It would appear that this is precisely what AAPL has in mind. In Tim Cook’s December 2012 interview with NBC’s Brian Williams, Cook mentioned that when he goes into his living room and turns on the TV he feels like he’s gone back in time 20 to 30 years. He then stated “A universal remote application that enables an iPad, iPad mini or an iPhone to control all living room technology would fill a major need.”

A third angle of Apple TV that has enormous potential relates to the basic HDTV cable and satellite sector. It’s widely acknowledged that these providers charge consumers for large quantities of content that are never viewed. If the AAPL system could allow users to cut the cord and purchase television content in an a la carte method, the cost savings will provide incentive to purchase the product.

The state of the cable and satellite sector is ripe for innovation. In light of the notorious consumer dissatisfaction toward cable, satellite and phone companies, an AAPL device could improve user experience and provide these operators that promote AAPL’s device with a meaningful competitive advantage. For example, Katy Huberty of Morgan Stanley recently surveyed consumers and found they’d be willing to pay a 20% premium over current television prices for an Apple TV. Alternatively, there is also the possibility of AAPL partnering with a cable, satellite or telephone company with its device(s). Regardless of the final structure, the opportunities are massive because consumers could ultimately enjoy a much longed-for superior experience, and that will drive demand.

Sizzle #3 Apple iWallet

The iWallet represents yet another product that can create sizzle and profits for AAPL. While it’s been suggested that the biggest barrier to entry is the payment infrastructure, that argument has been countered with the suggestion that payments be linked to the more than 500 million credit cards associated with users’ iTunes accounts

While scanning devices to receive payment are fragmented throughout the retail industry, it’s possible this fragmentation will give AAPL an edge over competitors because of its iconic status and being the world’s most trusted brand.

The evolution of iWallet’s infrastructure is unfolding in real time, and is exemplified by the iPad and iPod’s continuing use and credibility as a retail tool. For example, Nordstrom is the latest retailer to begin implementing iPods and iPads into its payment structure. If enough retailers follow the trend it will provide AAPL with a pre-distributed network to receive secure payments through iWallet.

Believing In The Words Of Management – Tim Cook – Innovation and Bold Bets

While statements from management of a company are frequently self-serving, I believe the recent comments made by Tim Cook, CEO of AAPL at Goldman Sachs Technology Conference on February 12th are worthy of very serious consideration:

Cook said he’s “never been more bullish” on the innovative products in Apple’s pipeline.

Continuing, Cook stated: “Apple doesn’t have a depression era mentality. Apple makes bold and ambitious bets on products, but we’re conservative financially. Yet, if you look at what we’ve done in terms of investment — last year we invested $10B in capex and expect to do the same this year.”

Not Unexpectedly, No “Sizzlers” Announced at AAPL’s Shareholder Meeting

AAPL’s Annual Shareholder Meeting was held yesterday, 2/27/2013, and the business of the meeting was largely routine. There were no surprises nor dramatic announcements, and that’s what should have been expected since an “Annual Meeting” has a fixed format, mundane issues need to be voted upon, and, for a variety of reasons, (including disclosure and legal issues), such meetings are highly structured and choreographed.

However, there were those (especially traders) that were hoping for multiple and dramatic announcements relating to such sizzlers as new product launches, a stock split, or a decision on how APPL’s cash hoard would (or could) be distributed to shareholders. However, these kinds of issues aren’t normally discussed at Shareholder Meetings, and boards of directors typically won’t address hypothetical questions relating to such issues.

Since no headline announcements were made, the stock opened at $448.97 near its 52-week low, moved briefly into positive territory with the broader market, and was back in red shortly before noon. It hit its intraday low, $440.65, three minutes after the meeting ended, and closed at $444.57, down $4.40 (0.98%) for the day.

In my view, some of the forthright commentsmade by Tim Cook were significant and worthy of scrutiny, including the following:”The Company is in very, very, activediscussions” about what to do with its growing stockpile of cash.

Regarding new products, Cook was “Appelesque” in his comments when he stated the Company is “looking into new categories” but said the Company doesn’t talk about them.

At the end of the day (literally), traders were disappointed and they translated “no news” into “bad news,” ignoring the protocols of Annual Meetings, and “forgetting” that the legendary Steve Jobs himself, rarely attended shareholder meetings.

I contend that the substantive sizzlers that APPL has on the horizon will come forth in headline news at the right time, and in the right platform.

Significant Metrics

Metric Factor/Number
Closing Price 2/26/2013 $448.97

PE Ratio 10.18

2012 Dividend Per Share $10.60

Next Ex-Dividend Date 05/07/13

Effective Yield 2.36%

52 Week High $705.07

52 Week Low $435.00

Beta 0.80

5 Year Growth Rate 71.66%

Current Year Est. EPS $44.70

Next Year Est. EPS $50.77

Compiled by Craig Van Pelt
SOURCE: Scottrade


I’m convinced AAPL will have a significant rally in 2013. The possibilities of big “sizzles” arising from headline news depicting “disruptive innovations” could propel AAPL to new highs. In my view, it’s inevitable. In the meantime, buying the “Steak” is, by any measure, a superior investment and AAPL’s metrics have created a “floor” beneath the stock. For example:

√ Its balance sheet shows some $137 billionin cash which translates to more than $100 per share

√ Its P/E of around 10 is below its sector, and way below Google’s P/E of 24.77

√ Its current dividend yield of about 2.4% (which is likely to increase) pays investors to be patient, and there are continuing “whispers” of a possible stock split of 10:1.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Feb 28 2013, 9:01 | by Craig Van Pelt | about: AAPL

Learn more about Ron Sloy.

Evan Niu, CFA
February 13, 2013

Apple (NASDAQ: AAPL) is cheap. It’s a fact. Considering the massive 33% pullback that shares have seen over the past few months, combined with a rock-solid business, Apple’s trading multiples have compressed further into value territory.

Earnings were relatively flat last quarter, but the company’s P/E has still trended lower and is now just 10.66.

That’s significantly cheaper than the S&P 500, and according to a recent Bloomberg report, we’re talking about the biggest discount relative to the broader market in 12 years. By Bloomberg’s estimates, Apple trades at a 29% discount to the S&P 500, a level not seen since December 2000.

At the same time, Apple has previously been proven to be disproportionately responsible for much of the market’s earnings growth, highlighting how strange this discrepancy is. In fact, one technical analyst recently recommended a brave trade to capitalize on this divergence.

Oppenheimer’s Carter Worth has recommended going long Apple while shorting the S&P 500 since the index has rallied significantly over the past few months while the Mac maker has gotten unjustifiably crushed. Worth believes the broader market has gotten ahead of itself and is set to pullback while Apple is due to bounce and head higher to approach $525.

The negativity surrounding Apple has reached a fever pitch, and that’s dominated the minds of investors far more lately than the underlying fundamentals of the company. Analysts have toned down price targets on concerns of competition and margin compression, with Bloomberg pegging the median analyst price target at $613, down from $781 just five months ago.

That’s still substantial upside from current prices and shows just how undervalued Apple has become in recent months — so much so that investors are freerolling on numerous potential product introductions in the near future.

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Ron Sloy
Certified Financial Planner (CFP)

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