Barrons’ “The Trader” column discusses Apple (AAPL), whose shares are down 35% in a month. At 130, shares trade at 20.7x forward earnings, the cheapest in a while. Stripping out its big cash stash, the stock trades at about 13x FCF. While the Street frets about slowing iPod sales, it's easy to forget Apple’s range. Mac revs grew 47% last qrtr. Unit sales are expected to increase at a pace more than double the industry's 11.6%, and Apple continues to gain share in the computer and phone mkts. Investors moaning about the 4m iPhones sold so far forget that Apple had no mobile-phone presence just a yr ago. Margins near 35% should improve with cheaper component prices, and Apple is rolling out its new operating system and iPhones overseas. In fact, Apple's knack for packaging aspiration and creating things ppl feel compelled to own will stand it in good stead in a spending slowdown. The new "MacBook Air," for instance, has inspired lust among existing laptop owners, and the buzz among young media types means consumer magazines will pant after it in print for mo’s to come. If history holds true, profit taking in Apple will exhaust itself about 21 days after the earnings report. Last week, Citigroup analyst Richard Gardner called the sell off "overdone." Deutsche Bank analyst Chris Whitmore has a 225 price tgt.
Barron’s cover out saying that the downdraft in the market may not be over, but some stocks already look inexpensive and worth a long-term bet. "These are some of the best opportunities that I've seen in the past seven yrs," says Mark Boyar, of Mark Boyar & Co. Co’s worth a look include: BAC, WB, WFC, C, PFE, LIZ, HOG, DOW, MET, TWX, CBS, FNM, GCI, IACI, CB, COP, FCX, BA, GE, CMI, DIS, MO and MOT.
Barron’s Roundtable members like WMI, ROH, INTC, XLNX, EUM, FXP, SCJ, FIS, HAFC, BAC, LNC, PAY, CHK, HIG, DVN, ESV, AVT, ROST, ZINC and ELRN. Shorts include: XLY, FXI and DRYS.
Buyers of Chinese IPOs beware. A research house finds many of these US-listed issuers still offer poor governance and accounting, as well as lower-quality earnings. "The results are quite striking," says Victor Germack, of RateFinancials. "And these are from the documents of record, b/c Regulation FD says they have to reveal public information through their filings. This is what investors rely on, not puff pieces from the co." The five are GA, LDK, NPD, YGE and GRO.
If Systemax's (SYX) high gross margins have been fattened by failure to pay out manufacturer rebates, then an end to that alleged behavior might crimp profits, and the share price. "Having a business model that heavily involves rebates, there's nothing inherently wrong in that, as long as you play it fair," says Matthew R.
