Walmart Outlook for 2015

Wal-Mart Stores (NYSE: WMT) is looking good as the year comes to a close, but that’s both good and bad for shareholders in 2015 in my view. Economic data is reflecting a healthy operating environment, but the stock is looking fat heading into the important turn of the year. Still, long-term holders should risk an early year dip and maintain holdings despite the stock’s P/E premium to its growth outlook, as upside surprises on lower gasoline pricing and economic strength could drive better than expected growth for the company and the stock. See our Wal-Mart Outlook 2015 Report here.

Bank of America & Oil Contagion Fear

A new fear is grabbing a hold of the financial sector. It’s forcing the sector to succumb to recent energy sector led market decline. It is behind the recent drop in Bank of America (NYSE: BAC) shares, and it is opening up an opportunity in the stock. But don’t buy just yet, not until we see the whites of their eyes, likely after the holidays. See our report on Bank of America here.

Apple Pay is Catching On – Catalyst for P/E Expansion

Apple (Nasdaq: AAPL) announced last Tuesday that the list of companies working with Apple Pay has expanded to now cover a significant portion of the nation’s transaction volume. While it still has a ways to go to completely reach every possible transaction at every store, reports indicate that it is being adopted at a fast pace. In my opinion, Apple Pay is the main reason why Apple’s shares have recently run higher, and for good reason. I expect the business to make an important contribution to the company’s growing operational results. I also believe it is allowing the previously stale P/E ratio some room to grow, which means Apple shareholders are in for some special gains in the next few years.

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 Pay just added several more financial institutions to its list of payments partners, including SunTrust Banks (NYSE: STI) and others, according to one of my resources for this report. From the consumer perspective, Apple Pay now supports 90% of all potential credit card transactions in the United States. The company is also seeking arrangements with providers of debit cards, prepaid cards, co-branded cards, small business credit and debit cards and corporate cards.

Apple (Nasdaq: AAPL) must also win the support of retailers and all companies that accept payments for goods and services. Early signees include McDonald’s (NYSE: MCD) and Whole Foods Market (Nasdaq: WFM) and recent signees include Staples (Nasdaq: SPLS) and others. Given the degree of Apple iPhone penetration, it behooves retailers and restaurants to accept Apple Pay in order to best serve customers. So this is something retailers are likely asking Apple about in many instances before Apple even approaches them.

Not only is the service becoming available though; it is being used by Americans. McDonalds indicated that 50% of its tap-to-pay transactions were through Apple Pay in November. It is being adopted because it simplifies the transaction process for customers and is a value-add for Apple’s partners. According to the New York Times, the NBA’s Orlando Magic basketball franchise expects it to speed service at its concession stands. Since lines at ballparks and stadiums are limiting to sales, as many fans hate missing the action, if Apple Pay can speed transactions it will help these partners sell more food and beverages and other goods. That is a value-add to sales and earnings, and all the more reason for companies to partner with Apple on this.

In the past, similar services provided by Google (Nasdaq: GOOGL) and others have failed where Apple seems to be succeeding. I think that is because of Apple’s broad iPhone penetration; big PR voice that got the message across clearly to a broad swath of America when it introduced the service; and because of today’s tech savvy population, which has gotten much better at picking up new technology. People want to try it out and are willing to spend some time to learn how to use it.

Some retailers are making their own app, including a consortium headed up by Wal-Mart (NYSE: WMT), but I’m not sure people are going to want to join up for more than one payment app. I suppose the consortium may be able to better compete with Google’s Android platform, but Google (Nasdaq: GOOGL) is likely stepping up its game to help support its platform partners.

While Apple has not offered much information on how successful Apple Pay has been, its partners have been talking. On CNBC Tuesday, I watched a SunTrust representative as he said the service was showing good progress. Obviously, as a newly won business partner, this SunTrust representative was supplied with the figures we have not yet seen. We do know that over 1 million cards were registered with Apple Pay within the first 72 hours of operation, according to Tim Cook.

But there is also circumstantial evidence. This weekend (12-20-14), I saw evidence that banks are using Apple Pay as a draw for their businesses, with commercials for Bank of America (NYSE: BAC) and J.P. Morgan Chase (NYSE: JPM) both flashing partnerships with Apple Pay. They would not be doing this if they did not see strong penetration and consumer interest in the application. Basically, the banks are riding the coattails of the highly popular Apple brand and its newest and greatest thing.

Over the last few years, I’ve often proposed that Apple’s low PEG ratio was reflecting investor concern that Apple could not keep growing and might even see some erosion of market share. We have been looking for the company to expand its efforts into television sets and other gear, and it has entered the wearables market with its Apple Watch. But I think it is Apple Pay that is most exciting investors today, and the reason for the stock’s gains since its introduction.

1-Year Chartof AAPL at Seeking Alpha

Apple’s P/E ratio is now 13.8X the analysts’ consensus EPS estimate for FY 15 (Sep). The company’s valuation metrics have been expanding, but the forward P/E ratio here still shows room for further expansion in my opinion. I expect that as the data is reported and investors begin to better see the potential for Apple Pay and Apple Watch, the P/E and PEG ratios will expand further. Given analysts’ expectations for 20% growth in FY 15, the current PEG on these figures is 0.7x. That’s cheap. Looking at the long-term growth estimate, I expect it will be revised upward from the current 11.5% estimate once data for Apple Pay and Apple Watch start rolling in. But even so, the company’s PEG ratio using this figure is a still modest 1.2X, and fails to incorporate the dividend yield Apple offers of 1.7% today. Reiterating and concluding, as data comes in and estimates are revised, I expect we’ll also see P/E expansion, so shareholders of AAPL will get extra lift to their investment return. Thus, I still love AAPL here. I cover AAPL semi-regularly, so readers may want to follow my blog and my column at SA.

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.

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

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.

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.

Are Blackberry Shares Being Manipulated?

An article was published at Benzinga.com on Saturday October 18th and reached Yahoo Finance via Reuters on the 20th before being repeated within a weekly highlights piece over the weekend before last. Also a Bloomberg video report featured a strategist suggesting an investment in BBRY options based on the rumor. The original story, which is based on an unconfirmed rumor, gained steam and influenced the trading in Blackberry (Nasdaq: BBRY). BBRY was up 12.2% through the publishing of my piece on October 29 from the $9.49 close on Friday October 17th. Compared to the 7.7% gain in the PowerShares QQQ (Nasdaq: QQQ) through the same span, that’s an important gain. So the story influenced the movement of the shares significantly. But, given that rumors of a Lenovo (OTC: LNVGY) acquisition of Blackberry (Nasdaq: BBRY) were smothered in the past by regulatory concerns, which I first raised to the attention of the public in my article A Blackberry - Chinese Company Merger Serves Apple and Maybe Hackers Too, then how could this latest story carry any weight? So is it a rouse then, and who is the “source familiar with the matter,” who the author references? Might someone be manipulating the shares of the stock, and if so, how do we play it? See my latest report on Blackberry here.

Since my report was published, Lenovo acquired Google’s (Nasdaq: GOOG) (Nasdaq: GOOGL) interest in Motorola, so BBRY shares seem to have lost their support.

Disclosure: I have taken a short position in Blackberry (BBRY) through put options as of Friday October 31. 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.

Chipotle Mexican Grill (NYSE: CMG) Report

Chipotle Mexican Grill (NYSE: CMG) reported an EPS blowout against Wall Street expectations. However, its outlook for 2015 disappointed investors, as the shares traded down 7% after the report. So what are investors to do with CMG shares now? Given the company’s excellent execution and the fact that it is in the right spot of the consumers’ stomach in America, it deserves a favorable perspective. In terms of valuation, I do not see it as an expensive idea against what are apparently conservative estimates. Chipotle still has to prove itself internationally, but markets are available for it similar to the U.S. market. I see risks around Ebola, should the global situation deteriorate, due to the company’s consumer focus and what fear may come. It’s wise to keep the radar attuned here, and for all the perhaps at risk names with consumer exposure and potentially sensitive valuations. I am not concerned, however, about global economic growth for CMG, as its menu price point is not relatively expensive. Also, the consumer trends that serve it in the U.S., regarding the increasingly health conscience society, exist in its next growth markets as well. Thus, aggressive and/or diversified investors, and those portfolios where restaurant exposure is needed, can consider adding Chipotle (NYSE: CMG) shares, especially as we enter December and exit the current dynamic capital flow environment. For more, see my report on CMG at Seeking Alpha.

Why I’m Conflicted About the Dow Dog Pack

I presciently got investors out of small caps and the iShares Russell 2000 ETF (NYSE: IWM) in August and warned about the higher risk in the Nasdaq-100 a few weeks before that. I was preparing to move followers into the Dow, as the dogged performance of the SPDR Dow Jones (NYSE: DIA) ETF illustrates what seems to be opportunity for “Dog of the Dow” theorists. The DIA seems to be calling out for acquisition given the underperformance of the Dow in recent times versus the S&P 500 and the Nasdaq. However, I’m conflicted about the purchase today, due to the international economic exposure of Dow dogs and apparent relative risk being priced in immediately. So, do we buy the DIA or not? See the full report about the Dow stocks here.

Apple Could Disappoint Wall Street this Quarter

While I doubt Apple (Nasdaq: AAPL) could miss the analysts’ consensus target for it this quarter, I think there is a possibility that the company could disappoint the market when it reports its earnings results nonetheless. So what happens if it does? Would its future prospects be enough to hold valuation ground? Undoubtedly, the company will talk about its astounding early orders of new iPhones, its just received clearance to sell in China and its prospects for Apple Pay and the Apple Watch, and maybe a new iPad. So, for the long-term Apple looks fine, but at the hour of its EPS release, it might still dip a bit if the result disappoints Wall Street. If I haven’t vetted that possibility efficiently through this article, you buy that dip after it settles. See the full report on Apple’s earnings preview here.