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Apple immune to stock sell-off

by Scott Bicheno on 15 August 2011, 12:07

Tags: Apple (NASDAQ:AAPL)

Quick Link: HEXUS.net/qa6v3

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There have been many times while writing this column when we have lamented not selling everything we owned back in early 2009 and put it into Apple stock. If we had, we would now be four times better off.

Of course there are many other stocks that, in retrospect, we could have made a killing investing in, but one of the most galling things about Apple's situation is that its current success wasn't difficult to foresee at the start of 2009. The iPhone was already a massive success and the smartphone revolution was well underway.

What was less obvious was quite how quickly things would develop, and what a good job Apple would do of staying ahead of the game, not least through the launch of the iPad. But it's still hard to shake off the feeling that we should have seen the quadrupling of Apple's share price coming.

This week's HEXUS.sharewatch covers a four week period due to your correspondent's annual flirtation with warmer climes. In that time global stock markets have generally plummeted due to the ongoing European and US debt crises and many of our stocks have followed, with Sony, Dell and Oracle among those most punished, for some reason.

But, considering the DJIA and NASDAQ have both plunged by around ten percent in the past four weeks, it's remarkable how well some companies have performed. Of the companies on our list Vodafone has recovered best from the sell-off at the start of the month, but Apple isn't far behind. This is mainly down to its general strength, but gaining the upper hand in its battle with Samsung won't have done Apple's stock any harm.

 

Company Listing Share price 4/7/11 Share price 11/7/11 Share price 18/7/11 Share price 15/8/11 28-day change Market cap (bn)
AMD AMD 7.11 6.95 6.43 6.21 -3.4% 4.27
Apple AAPL 343.26 359.71 364.92 376.99 3.3% 349.50
ARM ARMH 28.60 29.78 27.56 25.65 -6.9% 11.51
Avnet AVT 32.55 32.21 29.75 27.72 -6.8% 4.23
Cisco CSCO 15.86 15.74 15.59 15.99 2.6% 87.95
Dell DELL 16.98 17.14 16.97 14.87 -12.4% 28.04
Google GOOG 521.03 531.99 597.62 563.77 -5.7% 182.03
HP HPQ 37.05 36.43 35.09 32.32 -7.9% 67.04
IBM IBM 174.54 176.49 175.54 168.20 -4.2% 200.88
Intel INTC 22.53 23.09 22.37 20.65 -7.7% 109.49
Microsoft MSFT 26.02 26.92 26.78 25.10 -6.3% 210.29
Nokia NOK 6.42 6.22 5.54 5.36 -3.2% 20.36
Nvidia NVDA 16.15 15.43 14.10 12.88 -8.7% 7.73
Oracle ORCL 33.05 33.94 32.09 27.39 -14.6% 138.74
Qualcomm QCOM 57.88 59.36 54.96 50.50 -8.1% 84.83
Sony SNE 26.57 27.10 27.03 21.49 -20.5% 21.57
Vodafone VOD 26.90 26.75 25.77 27.08 5.1% 138.28
Dow .DJI 12582.77 12657.20 12479.73 11269.02 -9.7% N/A
FTSE 100 .FTSE 5989.76 5990.58 5843.66 5320.03 -9.0% N/A
NASDAQ .IXIC 2816.03 2859.81 2789.80 2507.98 -10.1% N/A


HEXUS Forums :: 9 Comments

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Hmm I wouldn't like to call anything immune, I also wouldn't like to say with hindsight something wasn't hard to see!

I also did loose a bit betting against em during the credit crunch, after I'd made quite a bit doing so, so they are volatile.

The thing is, they don't pay divs, they sit on a massssssive pile of cash. What are they doing with that cash?

Right now if its in say gold or something which is trust worthy people will be happy, a lot of people in the press have been saying the the continued gold bubble is a sign of distrust with the governmental powers that be, as such people like some other stocks.

I would also say that this title is SEO bate again, because its frankly not true, Apple suffered during the real unrest, if you look at some points it was trading with grater relative drops than IBM. To claim its immune is silly.

Also given that they are sitting on so much cash, they need to make like porsche and develop a hedge fund style group inside themselves. This can then be used to efficently carry out their purchasing, whilst mainting the money in a responsible way.

Failure to do that, to continue sitting on a cash pile could be quite costly if its not invested properly, and if the market suddenly upswings.

As a result I'd compare Apple to a synthetic of someone like MAN and a tech stock which isn't in growth mode.
I knew you wouldn't let me down Animus. Apple is up when most other companies are down - that's clearly the point I was making, but whatever.
If ever your at one of the meets I'll tell you about my day job in a past life, which involves presenting, whilst I'm not qualified to begin to judge the numbers, it does mean I have access some rather gnarly software for looking at this stuff!

It is very true that Apple is up when most are down, but it did drop too. When you look at the implied volatility (backed out from what the options are traded at) the surface did skew away from the more classic smile for the short term.

The thing that suprises me about apple, which I've been banging on about for years now is how they sit on this massive war chest. What are they doing with that? When you look at it in respect to their earnings it strikes me as a significant part of the valuation and future earnings potential.

As such I'd argue Apple is fairly unique, unlike any other tech stock I can think of.

If you plot its volatility (implied or realised) with MAN group, it looks somewhat similar, but both really did drop price, rise in vol, during the events of the last fortnight. If you then plot it against porsche say, you can see a similar pattern.

So I would say Apple was vulnerable to the sell off, but no investor can really hold that against them, at the time gold and certain commodities were been massively bought into, mining outfits, even commodity investment funds were being hammered on the open market.

To me, what was impressive is that Apple had steady growth before this. After the sell off most companies rebounded mostly, Apple were stable growth before and after.

As for Sony's failures, I'd hazard a guess its easy, after the Japanese tsunami, they took a beating with the hacking issues of the PSN, and quite simply haven't recovered, sales of TVs and the like are down, their supply chain buggered up a bit. A mate of mine went in quite heavily (about 20% of his retirement money) on them after the tsunami de-valued them, ooops. Then again I bought Hitachi ADRs and well should have sold them at 60 but got greedy….
Fair enough - and I'll confess to a minor liberty taken in the name of headline writing - but I contest the ‘SEO bate’ (sic) charge. While Apple dipped along with everyone else, over the course of the past four weeks it's up while the indices are down. That's all I'm saying.

God knows what they're going to do with all that cash, and I don't understand the logic of neither acquiring nor paying dividends. But Apple's share price is doing just fine regardless, so it's hard to criticize.
TBH you have to admire them - love or hate them (I'm ambivalent) they're doing very well.