Should Apple Split or Start Splitting Up? | | SPONSORED CONTENT Apple Pays $30 Million per Month for Mysterious "6G" Network? 5G has barely hit the market...And already there is something more powerful. A combination of technologies that takes regular 5G -- and turbocharges it.
The biggest companies in America are paying a king's ransom to get access. Apple is paying $30 million every month to use this early "6G" network. Facebook forks over $11 million per month for private access...NASA, the U.S. Department of State, the USDA...All are currently using this explosive early "6G" network.
This "6G" pioneer could be the most important tech company in the world. Click here for details. CLICK HERE... | | | Apple Inc. (NASDAQ:AAPL) is always at its best when CEO Tim Cook can deliver tangible progress, instead of manufacturing the illusion that the biggest company in U.S. history is still as dynamic as ever.
Many of us on Wall Street were braced to see Cook report a slight year-over-year sales decline in the face of global pandemic conditions and a more substantial hit to the bottom line. We thought he'd engineer the accounting to come out somewhere close to last year's results.
What we got was a surprising show of strength. Sales across the company are up 11% from last year and net income expanded right in line with expectations.
After adjusting for Cook's tireless stock buyback program, earnings per remaining Apple share are up 18%. On the surface, this is a growth company again, and it is running rings around a quarantine-shocked economy.
People did the surface math and figured that they'd rather own this stock than the S&P 500, which is tracking a harrowing 42% profit decline this quarter.
If I were forced to make that choice, I wouldn't blame them. But the market provides hundreds of other options which ensure that alert investors will never need to reach for Apple if the deep numbers don't add up.
I wouldn't buy this stock at $400 just because it's holding up better than most of its peers. And a month from now, I wouldn't even pay $100 for it. I want more than what Tim Cook can engineer. | | | The Sell-Off Has Created the Greatest Profit Opportunity of the Century Every investor knows the coronavirus sell-off has stocks sitting at prices not seen in years. So, where do you turn for the biggest bounce-back stocks of the next 12 months?
In my new report, you'll learn how the new digital revolution -- artificial intelligence, machine learning and big data -- will create trillions of dollars in wealth... including my #1 Value Stock of 2020. Click here for the developing story. CLICK HERE... | | | A Split Doesn't Help Shareholders Or the Dow
Of course, a month from now, investors will receive three new Apple shares for every one they currently hold. The stated goal is to reach a broader base of investors, but I'm not convinced.
If Apple is too expensive at $400, you've also got to throw out Amazon.com Inc. (NASDAQ:AMZN) above $3,000, Booking Holdings Inc. (NASDAQ:BKNG) at $1,600 and change, Alphabet Inc. (NASDAQ:GOOG) around $1,450 and endless other retail investor favorites.
Remember, we can buy and sell fractional shares of any stock now. If you only have $100 today, you can own $0.25 a share of Apple or $0.03 a share of Amazon. You aren't shut out of anything.
And current shareholders won't automatically gain or lose anything. The company will remain a giant and well above $1.7 trillion in market capitalization as of today.
But Tim Cook will benefit because, as the share count rises, he needs to do less heavy lifting behind the scenes to create the per-share effects Wall Street demands.
Currently, I expect Apple to end up with about 2% less profit this year than it squeezed out of the business in 2019. Cook needs to buy back 86 million shares to show shareholders that mighty Apple isn't actually deteriorating on a per-share basis.
Where this gets interesting is that accountants and analysts alike round numbers down to the nearest whole digit when we factor in a split. Apple earned $11.89 per share last year. Quadrupling the share count means that the figure in question will show up in the data as $2.97.
A fraction of a penny per share gets lost in the math. With a company as big as Apple, that fraction means Cook can spend less money to engineer the same earnings per share (EPS) "growth" as far as investors obsessed with per-share math are concerned.
If, for example, he just wants to show us 4% EPS growth this year, splitting the stock has just saved him $10 billion. Plow that money back into the buyback program and round up, and he might squeeze an extra percentage point of apparent growth out of the operation for free.
And in the meantime, the Dow Jones Industrial Average suffers. Because the blue-chip barometer is weighted around stock price and not market capitalization, dividing each existing AAPL share by four will force some complex adjustments.
Normally, those adjustments ensure that the benchmark remains unchanged, despite corporate accounting changes. However, because AAPL is by far the best-performing Dow constituent, its reduced role will hurt in the future.
If Cook had done this split at the beginning of the year, the Dow would be 2% lower today. That's not a huge gap, but it still represents a vast amount of money. | | | Win Up to 87% of the Time -- Even in Volatile Markets My "5 Tips for Overcoming Market Volatility" can make you great returns in both good -- and volatile markets.
These strategies can turn even the most unstable markets into cash opportunities. Click here now to learn how protect and grow your money, regardless of market conditions. CLICK HERE... | | | Again, Apple doesn't materially change. It's just how the math plays out. And if Cook's engineering remains resonant on Wall Street, I might need to cut my Dow target by 2-3% for the remainder of this year.
When you're dealing with a company this big, it's the little things that matter. After all, Apple has created enough wealth for shareholders this year alone to buy the 76 smallest companies in the S&P 500 outright.
That's arguably too big for anyone's comfort. While I know Tim Cook would hate to break the company up, maybe it's time to start at least thinking about whether there's value in division here. We'll discuss that soon.
I talk about these things every week on my "Millionaire Maker" radio show. Are you listening? (Click here for recorded episodes and local stations.) | | Rotation Is Healthy by Hilary Kramer
Editor, TurboTrader
It has been a flat week for Wall Street as a whole, but Big Cannabis, led by Canopy Growth Corp. (NYSE:CGC) and Tilray Inc. (NASDAQ:TLRY), is soaring.
My favorite stock in the space, Aphria Inc. (NASDAQ:APHA), is down close to 8%. What happened? As far as I can see, it's healthy rotation at work.
APHA made cannabis bulls a lot of money a week ago, and it remains a store of relative value in an industry where big names like Aurora Cannabis Inc. (NYSE:ACB) are down 60% year to date (YTD).
Even TLRY, which is up about 4% this week, has a lot of lost ground to make up before it can claim to be a $17 stock again. What I think we're seeing is that fast money is moving out of APHA and into these truly battered companies.
If so, it's actually a show of confidence. Investors who wrote TLRY off for dead early this year see potential here again. They're willing to take a chance.
Maybe it's only the mood lifting, but if it turns into something more, rest assured, I'll keep you posted. | | | Sincerely,
Hilary Kramer
Editor, GameChangers and Trading Desk
| | About Hilary Kramer
 Hilary Kramer is an investment analyst and portfolio manager with 30 years of experience on Wall Street. The Financial Times describes Ms. Kramer as “A one-woman financial investment powerhouse” and The Economist distinguishes her as “one of the best-known investors in America”. Ms. Kramer is often quoted in publications such as the Wall Street Journal, New York Post, Bloomberg, and Reuters. She is a frequent guest commentator on CNBC, CBS, Fox News and Bloomberg, providing investment insight and economic analysis.
Ms. Kramer was an analyst and investment banker at Morgan Stanley and Lehman Brothers. Ms. Kramer founded and ran a long-short hedge fund and has been chief investment officer overseeing debt and equity portfolios. Since 2010, Ms. Kramer’s financial publications have provided stock analysis and investment advice to her subscribers. Her products include GameChangers, Value Authority, High Octane Trader, Turbo Trader, 2-Day Trader, IPO Edge, and Inner Circle. | | | | |
Tidak ada komentar:
Posting Komentar