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Wednesday, December 17, 2014

Gold is About to Collapse but Also Mark Bottom

I see the price of gold dropping sharply this week, but then marking a bottom within a matter of days. The dollar strength which has impacted gold’s decline most over the last several years should be refueled this week by two important central bank events. But within days of these events, I expect gold to mark an important bottom and to drive higher on a new concern I expect will be raised about the dollar’s safe haven status. See more about this gold report here.

Sports News Blog

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Tuesday, December 09, 2014

Apple (Nasdaq: AAPL) - December Seasonal Swing Offers Opportunity

Apple store
Apple (Nasdaq: AAPL) shares have sold off in concert with the market to start December, but don’t throw your Apple shares out with the bathwater now. Apple shares have exaggerated the market’s decline, and I find it ironic considering the value proposition Apple’s shares still offer versus the market. I believe the selloff is due to seasonal factors that are about to shift in our favor. So, I suggest investors not rush to sell in panic, but rather consider the decline a new opportunity to add Apple shares to holdings.

Apple blogger
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Apple (Nasdaq: AAPL)


As I showed in my report about December seasonality, the month has historically outperformed all others. Since 1950, stocks have averaged a 1.6% gain in December; that is the best monthly performance. Yet, the first half of the month has produced less predictable and somewhat conflicted results. Over the last 10 years, the S&P 500 Index has only risen 0.2% on average from December 1st through the 15th of the month. It seems much of its gains come in the second half of the period. The traditional Santa Claus Rally does not run until the week between Christmas and New Year’s.

A few months back, I said Apple (Nasdaq: AAPL) shares would prove to be a good flight to quality destination. In the months that followed and through October when the market swooned, Apple remained a stalwart stock. However, the same reliability is not reflected in this month’s price action. The S&P 500 Index was off about 1.4% month-to-date through early AM trading on December 9th, yet Apple shares were down 6.5% for the month at that point. Interestingly enough, both Apple and the market on the whole seemed to be already turning around into the late afternoon trade. At some point before long this month, I expect Apple should resume its impressive trend line higher with conviction.

The S&P 500 Index (NYSE: SPY) trades at 19.9X trailing twelve month earnings, versus Apple’s relative P/E discount of 17.5X. Apple today is still a value at just 14.6X the analysts’ EPS consensus estimate of $7.76 for fiscal 2015 (Sept.). Apple pays a dividend yield of 1.6% here, and analysts estimate earnings growth of 20% this year. The five-year estimate for EPS growth is likely understated, as analysts are still unable to make sense of the company’s opportunity with Apple Pay and other efforts. Analysts see long-term growth at 11.5%, giving the company a PEG ratio of approximately 1.26X. When incorporating the dividend yield, I come up with a KPEG of 1.1X. That’s a value opportunity for the growth and dividend being offered, especially considering I think growth is understated.

The December seasonal selloff will soon turn to rally in my view, so I would use this opportunity to buy Apple shares on sale. Apple’s shares are up 44% year-to-date after adjusting for dividends and splits. That is significant appreciation since I recommended the shares at the start of the year. On January 2nd, I said Apple could unlock 68% upside value nearly overnight if it were to present new innovation, which it clearly has this year. The stock trades a little higher now than the average low point of its historical P/E range, but it has a long way to go to get to its recent history’s average high P/E ratio in the mid-20s. I talk about this in this 2012 report answering the question, Should I Buy Apple. Apple has clearly been a buy idea for me for years, and it is ever more appealing now that it is on sale. As I follow Apple somewhat regularly, readers may have interest in following my column.

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Greek Church Candles

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Monday, December 08, 2014

Week Ahead – Jolly Good Times?

Santa Claus
All the news is good, and yet stocks have opened the week lower Monday. Eyes are still focused eastward at Europe and China as international economic data continues to weigh somehow here at home despite strong domestic data. The week is light of U.S. economic indicators, but retail sales data is due. Investors and analysts will be busy enough with festive investor conferences and analyst days and those are always filled with jolly good news no matter the corporate presenters.

Santa Claus Rally


5-Day SPY Chart at Seeking Alpha
Stocks rallied through the first week of what is historically speaking the best performing month of the year. There was some volatility to work through on Thursday, but after Friday’s confirmation about the good health of the U.S. economy in the monthly jobs report, we should be ready to roar higher now.

Security
YTD
TTM
SPDR S&P 500 (NYSE: SPY)
+12.6%
+15.0%
SPDR Dow Jones (NYSE: DIA)
+8.5%
+12.1%
PowerShares QQQ (Nasdaq: QQQ)
+19.8%
+22.5%
iPath S&P 500 VIX ST Futures (NYSE: VXX)
-38.7%
-42.2%
PowerShares DB US Dollar Bullish (NYSE: UUP)
+10.2%
+9.9%
SPDR Gold Shares (NYSE: GLD)
-1.5%
-3.5%
iPath S&P Crude Oil (NYSE: OIL)
-31.8%
-31.3%

The dollar also found support again thanks to the economic confirmation, and that put pressure on commodities priced in dollar terms, including gold and energy. It still looks like the ECB will grow increasingly likely to go to extraordinary lengths to support the euro zone given that economic growth expectations continue to be adjusted lower. However, there is also some risk to the dollar posed by the potential for terrorism this month as we approach Hanukah and Christmas. In 2009, the “underwear bomber” attempted to blow up an aircraft on Christmas Day, and this past week a report surfaced about terrorist hopes to destroy several aircraft around Christmas this year. Thus, investors should probably have hedges in place on the week of Christmas and also for New Year’s Eve.

The economic schedule hardly offers much of note this week. We will still need to pay attention to the Producer Price Index (PPI) indication about producer level inflation. The data should begin to reflect lower energy prices before long, and that expectation has this indicator somewhat muted this month. Retail sales data is due Thursday and expected to be relatively positive. The consumer economy of the U.S. is of utmost importance to the investment community. We must see consumer spending and confidence continue to improve, and it should thanks to lower levels of unemployment and sharply lower gasoline prices. Small businessmen will weigh in on Tuesday, but I’m expecting them to increasingly become more positive about the environment given political change they likely favor due to the increased costs they have born over recent years.

THIS WEEK’S ECONOMIC REPORT SCHEDULE
Economic Data Point
Prior
Expected
MONDAY


5.22



TUESDAY


-1.8%

-Year-to-Year Pace
+2.8%

+4.8%

96.1

4.735 M

Wholesale Trade (Inventories)
+0.3%
+0.2%
WEDNESDAY


-7.3%



-Crude Oil Inventory
-3.7 MB

-Gasoline Inventory
+2.1 MB

$-121.7 B
$-63.0 B
+0.8%

THURSDAY


+0.3%
+0.4%
-Less Autos & Gas
+0.6%
+0.5%
+0.3%
+0.3%
-1.0%
-0.2%
-Import Prices
-1.3%
-1.7%
297K
295K
39.8

-22 bcf

FRIDAY


+0.2%
-0.1%
-Core PPI
+0.4%
+0.1%
88.8
89.5

Earnings reports this week surprisingly still include some important names. An important homebuilder reports in Toll Brothers; an important measure of leisure spending in Vail Resorts; important retailers perhaps showing the state of discretionary spending and employment in Lululemon and Men’s Wearhouse. The entire list follows here.

HIGHLIGHTED EPS REPORTS
Company
Ticker
MONDAY

ABM Industries
NYSE: ABM
Central Garden & Pet
Nasdaq: CENT
Diamond Foods
Nasdaq: DMND
H&R Block
NYSE: HRB
IDT Corp.
NYSE: IDT
Ingles Markets
Nasdaq: IMKTA
KiOR Inc.
Nasdaq: KIORQ
Laudauer
NYSE: LDR
Liberty Tax
NYSE: TAX
Medley Capital
NYSE: MCC
Photronics
Nasdaq: PLAB
Triangle Petroleum
Nasdaq: TPLM
Vail Resorts
NYSE: MTN
TUESDAY

ADDvantage Technologies
NYSE: AEY
Analogic
Nasdaq: ALOG
Autozone
NYSE: AZO
Burlington Stores
Nasdaq: BURL
CHC Group
Nasdaq: HELI
Conn’s
Nasdaq: CONN
Enzo Biochem
NYSE: EZN
Freshpet
Nasdaq: FRPT
HD Supply
NYSE: HDS
Korn/Ferry Int’l
NYSE: KFY
Krispy Kreme Doughnuts
NYSE: KKD
Miller Energy Resources
Nasdaq: MILL
Mitcham Industries
Nasdaq: MIND
NCI Building Systems
NYSE: NCS
Ossen Innovation
NYSE: OSN
Pep Boys
NYSE: PBY
Science Applications Int’l
Nasdaq: SAIC
The Pantry
Nasdaq: PTRY
UTi Worldwide
Nasdaq: UTIW
WEDNESDAY

Aviat Networks
Nasdaq: AVNW
Cantel Medical
NYSE: CMN
Casey’s General Stores
Nasdaq: CASY
Cherokee
Nasdaq: CHKE
Comtech Telecommunications
Nasdaq: CMTL
Comverse
Nasdaq: CNSI
Costco Wholesale
Nasdaq: COST
Ferrellgas Partners
NYSE: FGP
Fifth Street Senior Floating Rate
Nasdaq: FSFR
Francesca’s Holdings
Nasdaq: FRAN
Hovnanian Enterprises
NYSE: HOV
INTL FCStone
Nasdaq: INTL
Investors Real Estate Trust
Nasdaq: IRET
KMG Chemicals
NYSE: KMG
Lands End
NYSE: LE
Layne Christensen
Nasdaq: LAYN
Men’s Wearhouse
NYSE: MW
Monmouth Real Estate Inv.
NYSE: MNR
Oxford Industries
NYSE: OXM
Panhandle Oil & Gas
NYSE: PHX
Peregrine Pharmaceuticals
Nasdaq: PPHM
Restoration Hardware
NYSE: RH
Sigma Designs
Nasdaq: SIGM
Star Gas Partners
NYSE: SGU
Straight Path Communications
Nasdaq: STRP
Titan Machinery
Nasdaq: TITN
Toll Brothers
NYSE: TOL
Vera Bradley
NYSE: VRA
Wet Seal
Nasdaq: WTSL
THURSDAY

Adobe Systems
Nasdaq: ADBE
Ciena
Nasdaq: CIEN
DLH Holdings
Nasdaq: DLHC
Esterline Technologies
NYSE: ESL
Lee Enterprises
NYSE: LEE
Lululemon Athletica
Nasdaq: LULU
Methode Electronics
NYSE: MEI
Nordson
Nasdaq: NDSN
Quiksilver
NYSE: ZQK
RadioShack
NYSE: RSH
FRIDAY

Exceed Company
NYSE: EDS

Other reports you may enjoy:

Our Report on Gold
Our Report on GoPro (Nasdaq: GPRO)
Our Report on McDonald’s (NYSE: MCD)

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Greek store

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