Duck and cover or cut and run?
I't's time to review our virtual portfolio and the markets to see if we still like the stuff we have. I'll do a market reveiw for the Monday open but right now, let's see where we are with our open picks:
AAPL (.78, up 46%) - I'm not going to waste time talking about how great Apple is (that's Reinharden's job!) but COME ON! - 2005 EPS $1.58 on $13.9Bn in sales, 2006 EPS $2.27 (+44%) on $19.3Bn (+38%) in sales, 2007 projected EPS $3.21 (+41%) on $24.28Bn (+25%) in sales, 2008 projected EPS $3.77 (+17%) on $30.56Bn (+25%) in sales...
Oh no, get me out of this stock!
First of all, we just had a 46.2% earnings surprise in Q1 '07 of $1.14, vs. .78 expected. Qs 2-4 last year were $1.62 so if they have zreo growth for the rest of the year that's $2.78 out of $3.21. The forecast calls for the last 3 Qs of this year to grow to $2.07 (27%), just 60% of the first quarter's growth rate. Had Apple gone up to $107 on that news, I'd be concerned but going DOWN to $85 put them on my BUYBUYBUY list!
The assumption in the projections is Apple's sales growth will drop in half over the next 24 months and their EPS growth will drop by 2/3. I'm pretty sure you can arrest Jobs, put a crown of thorns on him and make him walk down the streets of Seattle with a giant Zune strapped to his back and the rest of the desciples would still figure out how to grow the company more than 17% in '08. Perhaps they plan on feeding Apple users to the lions?
I Added the July $85s but I will sell calls against it fast if it turns down any more.
