Barron’s Says Apple is America’s Most Respected Company – I Beg to Differ

Barron’s, one of my favorite weekly reads, published the results of a survey this weekend that showed Apple (Nasdaq: AAPL) as America’s most respected company. With all due respect to the publishers of this great investors’ tool, I beg to differ. Barron’s says that what matters most is that the company display strong management; that it practice ethical business; it should have a sound business strategy; display a competitive edge and show product innovation. I think we can make a critical argument against each of these factors in Apple’s case. Finally, I think that what investors report to Barron’s is not being backed up by real investment dollars in many cases, based on my interpretation of the one true measure of investor respect, valuation. With all that being said, Apple still tops my list among stocks to own today. That is because I believe it dropped the ball in years past and is a value today because of it ahead of what I hope will be one of the big new value-added developments I have long been waiting for. For more, see Barron’s Rated Apple as America’s Most Respected Company – I Beg to Differ. The top five companies included Berkshire Hathaway (NYSE: BRK.B), Boeing (NYSE: BA), Google (Nasdaq: GOOG) (Nasdaq: GOOGL) and Johnson & Johnson (NYSE: JNJ).

If Apple Soars is Google Out the Door?

1-Year Chart Comparison of GOOGL & AAPL at Yahoo

It’s a legitimate question to ask. Might Google (Nasdaq: GOOG) shares fall if Apple (Nasdaq: AAPL) shares rise in coming months? Some will say that even if it occurred, it would be coincidental, because the paths of the two stocks are mutually exclusive. But are they?

The one-year chart comparison of the performances of Google (Nasdaq: GOOGL) and Apple (AAPL) shows rising shares and positive returns across the board. However, you will note that the most recent history seems to portray at least a divergence if not negative correlation between the two. There are other than operational reasons why that might be, and we get into those in our report Why Google Could Fall if Apple Rises.

Apple’s Playbook (AAPL)

In my reporting on Apple (Nasdaq: AAPL) over the years, I believe I’ve been an early voice exposing catalysts or the absence of catalysts behind the stock’s movement, or rather lack of upside movement. It has sometimes taken awhile for the company to find the route I have laid out for it in my articles. Eventually, though it seems the message gets through, judging by the actions that eventually follow through. Or, more likely, at the insistence of activist investors, Apple is finally actively seeking to correct its valuation issue. The stock has been deeply discounted to the value of peers like Google (Nasdaq: GOOGL, Nasdaq: GOOG), Microsoft (Nasdaq: MSFT) and others for too long now. Whatever the case, Apple is clearly and finally seeking to add value by means other than operational. However, what comes next is likely going to be an operational catalyst. If it’s not, then another of my articles may prove prescient, and it’s one that would definitely drive change at Apple. The good news is that I don’t see that happening, and I do see Apple finally rising to new heights. For all the sexy details on how this will be, see Apple’s Playbook Revealed. to new heights. For all the sexy details on how this will be, see Apple’s Playbook Revealed.

Bank of America is a Gift from God Here

Bank of America (NYSE: BAC) took a hard fall after its executive team failed to accurately report its regulatory capital ratios to the Federal Reserve. The company had its capital plans frozen as a result. With expectations for a sharp dividend increase and share repurchases built into the stock price, investors were disappointed. And then the company’s earnings outlook required a second look, given the accounting errors and the absence of share repurchases. That leveled the stock, cutting 6% off its value in one day. But, after all that, I suggest Bank of America (NYSE: BAC) is now a gift for those who do not yet own the stock. The company has resubmitted its third-party reviewed capital figures and its financial plans to the Fed, and is now on a 75 day wait for approval. The stock is deeply discounted to peers, trading at just 1.1X tangible book value, versus 1.65X for Wells Fargo (NYSE: WFC), 1.34X for J.P. Morgan Chase (NYSE: JPM) and 2.05X for U.S. Bancorp (NYSE: USB). If BofA could attain the average value of itself and those peers and trade at a conservative 1.5X tangible book, it would be worth 37% more than it is today. That is a gift from God for new entrants. Please see our full report here for a more detailed analysis of Bank of America.

Facebook Stock Longs are Haunted by This Risk

By Markos N. Kaminis:

Facebook (NYSE: FB) shares are up another 1.8% today on the company’s strong first quarter earnings report. However, Facebook longs are haunted by a particular and disturbing risk. It’s a risk realized by similar business plans including the likes of AOL (NYSE: AOL), MySpace and other now long forgotten internet and technology plays. Don’t get me wrong; I’ve favored FB shares since the days when post-IPO punditry fell away and left the stock trading around $20. Recently, I salivated as FB drifted on macro issues that tanked the NASDAQ (Nasdaq: QQQ). I then penned Why Facebook is Falling and When to Buy it. I’ve advised Mark Zuckerberg indirectly through pen when his tech-oriented team failed to understand what Wall Street needed to see from it. It was a period where poor management from similar types drove the founder of Groupon (Nasdaq: GRPN) away after the great destruction of value in that stock. Today, Facebook and Google (Nasdaq: GOOG) are working hard to expand internet usage globally so as to maximize their opportunity. And Facebook is working hard to stay ahead of trends among internet users. Its acquisitions of Instagram and Oculus are examples of that, and proof that Zuck is paying attention. Facebook holders should likewise take note of the risk that should haunt the stock for the rest of its days. I’ve covered it in detail in my report: Watch for this Fly in Facebook’s Ointment.

Apple, Google & GE – Guess How 1 of These Should Copy the Others to Add Value

By Markos N. Kaminis

One of these things is not like the others. Can you guess which of these 3 broadly followed stocks could do better by copying something the other two do well? All three of these companies are innovators, but Apple (Nasdaq: AAPL) lags Google (Nasdaq: GOOG) and General Electric (NYSE: GE) in one key facet of its operations. Unfortunately, because of this inadequacy Apple’s stock is valued significantly cheaper than the rest. You would expect such a situation to offer an opportunity to purchase the stock. However, Apple has suffered its discount for an extended period of time, so those who have bought it over the past few years on the valuation reasoning have not seen the extraordinary gains they would have expected. I estimate that Apple could be worth 40% to 170% more today than the price it recently traded for if only Tim Cook would have a read of my latest report on the subject and do more for Apple shareholders by following my advice. Through the company’s earnings report communication today, it seemed to follow my guide, and the stock is up 7.5% in early trading Thursday. But it could be trading at $774 to $1450 instead of its current $564 if only management would have a read of my report: Apple, Google & GE – Which 1 of These Things is not Like the Others. It’s Apple’s responsibility to do so.