rovo's Market Journal -- 2011

[rovo]

re: HI Hillenbrand
Something is going on with HI. It could be the end of the quarter "window dressing" or it could be something else. Last Friday, June 24th, the stock dropped precipitously from about 23.20 to about 22.70 on huge volume of about 4.4 million shares vs. the 10 day average of 766K shares. Yesterday, 27 June, the stock dropped to 22.05 but recovered to close nearly flat at 22.66. Yesterday's volume was slightly above average. This morning in premarket it traded at 23.98 but dropped back to 22.67 at the open.

I am currently holding 14K shares of HI with 9K on the auction block. It appears there may be some violent upward movement about to occur in HI. I have kicked up my sell prices in anticipation of the rise. 1K shares for sale at 23.97, 24.07, 24.27, & 24.47 and 5K shares at 24.77.

[rovo]

I picked up another 100 shares of AAPL, Apple, this morning at $333.20 for a short term trade. Sell order placed at $336.60.

[IPAfan]

rovo,

I've been thinking of opening a position in AAPL myself. As you know I focus mainly on small/mid caps, but I'm not completely averse to owning larger companies if they seem attractively valued. I currently own PM in my portfolio.

AAPL trades at below the market valuation, and trades at 11X 2011 cash flow estimates once you net out the cash position. I still think there's a lot of opportunity for growth, and strategic borrowing or share buybacks could create some serious value at these levels in my opinion.

[rovo]

At current price levels AAPL is a value stock. Earnings should be reported fairly soon so we will see if there is any justification for the low stock price. Estimate for earnings is $5.63 against last Q's $6.40 and year ago of $3.51. Historically the estimates have been way below actuals so we will just have to wait and see.

Current PE = 15.92 and forward PE is 11.61. These PEs are modest for a company with a 5 year revenue growth rate of 36% and an income growth rate of 60%.

The sell order did not trigger so I'm holding it for a bit longer. This particular trade is not in my account with the AAPL for longer term.

[IPAfan]

I'm planning to open up a long position in AAPL over the next few days. I plan to hold onto this for a while (as long as the company continues to grow at anything over 20%). I've looked at this investment for 3 years and keep making the stupid mistake of not buying because the company is too big to keep growing at this rate.

Realistically I don't care as the growth rate slows down so long as it's still moving in the right direction. This stock is tremendously mispriced if it can grow earnings at 25% a year over the next 10 years. I have a really hard time believing it can grow at this rate, but it's still growing over 50% a year right now! AAPL is cornering the supply in the market and enables it to make huge profits even while selling at similar prices to the competition. I just think AAPL is creating a large brand that can be expanded to much of the world and can be cross sold to their client base.

[livinincali]

This stock is tremendously mispriced if it can grow earnings at 25% a year over the next 10 years. I have a really hard time believing it can grow at this rate, but it's still growing over 50% a year right now! AAPL is cornering the supply in the market and enables it to make huge profits even while selling at similar prices to the competition. I just think AAPL is creating a large brand that can be expanded to much of the world and can be cross sold to their client base.

If you compound out 25% growth for 10 years the numbers get completely ridiculous. At that rate AAPL would be grossing more than WMT or XOM or VZ and T combined. Considering you pay about $2000 dollar to T over the life of a contract for a $500/iphone I fail to see how AAPL revenue is going to grow at a rate that's going to exceed VZ/T's revenue combined. I'd guess that Apple's growth rate dips into the single digits by 2015-2016. They'd be 2-3 times bigger than they already are if the short term projections pan out, but even those might be a bit lofty.

I just know that AAPL will meet the same fate as ever other mega sized growth stock. It's going to peak when everybody thinks the growth will go on forever and it will look like a great time to buy the stock. KO, MSFT, CSCO, WMT, etc. all met the same fate they growth like crazy and then plateau. AAPL will get there too, maybe it will be a $500 stock or $700 stock before it plateaus but it will plateau and probably way before anybody thinks it will.

[yclept]

I just don't see the logic behind Apple's products. I see folks who obviously don't have a pot to pee in traipsing around with their smart phones and wireless pad things. That's costing what? A couple of thousand a year? But then, the whole wireless thing has left me in the dust. I guess I'm just an old fogy to whom the mere idea of paying a large monthly bill to twitter my friends seems insane. I already have a hard time scheduling my nap without yet another bothersome piece of equipment demanding time for useless endeavor (like posting to message boards!).

I think in the coming recession (probably started mid May), with the Fed having used up all of its ammo fighting the last one, folks are going to face a decision between paying their wireless bill or buying a can of beans for dinner. I suspect the beans will win.

Market's closed. Did very well today, thank you. Even that darned TBT was up a little! Reckon it's time for a little nap. Then maybe I'll go out and look for one of those Apple wireless devices -- or maybe not!

[yclept]

NEW YORK (AVAFIN) -- Block trading activities for shares of ProShares UltraShort 20+ Year Treasury reveal that 54 block trades were executed yesterday. Trade flow analysis shows that $23,566,364 worth of shares were bought and $529,002 worth of shares were sold by institutional investors. The positive cash flow $5,528,033 into the stock shows that investors have bullish sentiment.

[rovo]

I gave the wife an iPhone for Christmas since she "needed" a new phone and she loves it. She made me take her old phone since I had been phoneless. I still haven't used the darn thing. ;D

[IPAfan]

I fully expect AAPL to reach a growth plateau like other large growth stocks. However, at this price that's priced in and we still get a few years of highly above average growth out of the company for free. The company is trading at a much better valuation than the S&P when you look at enterprise value, and is above average in all aspects of its business. When the growth abates it may be possible to create a lot of value through share repurchases. Unlike WMT, XOM, T, etc., etc. this company DOES still have a healthy growth on the top line. There are a lot of markets to tap into. AAPL is now becoming the low cost leader in certain technologies like tablets which allow them to make obscene profit margins. They only have a small fraction of the laptop market. Still only a fairly small percentage of the total cell phone market, etc.

[yclept]

Well, it's a stock I'll remain happy not to own. Stuff like this makes me wary of it:

www.reuters.com/article/2011/05/20/apple-china-idUSN2028006820110520

labornotes.org/blogs/2010/06/suicides-apple-factory-china-rock-sweatshop-supply-system

english.cri.cn/6909/2011/02/20/1781s621727.htm

gizmodo.com/5542527/undercover-report-from-foxconns-hell-factory

I don't own any Chinese stocks right now, but have in the past, and don't kid myself that I know the ones I might own are any better than Foxconn. But at the same time, I guess ignorance is bliss, and I surely don't have to own something like Apple that is documented as being causal in exploitation of workers.

Jobs tried to defend their affilate, but it didn't hold water for me:
www.dailymail.co.uk/sciencetech/article-1283389/Apple-boss-Steve-Jobs-defends-China-Foxconn-factory-conditions-10-suicides.html

Kind of reminds me of some of the 18th and 19th century defenses of certain slave holders as being good -- you know, the ones that seldom whipped their slaves!

[danshirley]

The world is certainly an unequal place.

In the recent issue with the head of the IMF 'assaulting' the maid the part that bothered me most was that the room he was staying in costs $3,000 a night.

While the time of whipping slaves is over (at least in the US) the powerful will apparently always exploit their power and indulge themselves at the cost of the weak.

compare our ex-IMF head to Sister Mary Scullion:
www.americancatholic.org/messenger/aug2010/feature2.asp

When I first met Sister Mary she was sleeping on a cot in a storage room at project HOME.

Which also reminds me of an interview that Philadelphia Magazine just did with Ed Rendell ex Governor of PA and Ex Mayor of Philadelphia. The thing he was most happy about was that he was 'finally making some serious money'

Anybody want to buy a Governor??

The world is an unequal place.

[rovo]

Mixed data this morning but on the whole it is generally favorable. Construction spending was down -0.6% and was expected to be 0.0%. While this number is weak I still think we need to get already constructed stuff off the books, as in sold. Weakness in new construction aids in reducing inventory. The rest of the numbers we favorable.

I'm waiting for the auto sales numbers, usually announced at noon, since my largest position is in Ford.

The port is up nicely this morning but I need Ford to show some gains.

[rovo]

Ford U.S. June sales improve by 13.6%
12:10p ET July 1, 2011 (MarketWatch)
SAN FRANCISCO (MarketWatch) -- Ford Motor Co. said Friday that U.S. June sales rose 13.6% to 194,114 vehicles from 170,900 a year ago. Sales of Ford's best-selling F-Series pickups rose 6.7% to 49,618 units. Sales of the Focus jumped 41.2% to 21,385 vehicles, and Fusion sales increased by 13% to 20,808 units. Lincoln brand sales improved by 16.5% to 7,361 vehicles.


GM June US Sales Climbed 10% On Strong Retail Sales
11:13a ET July 1, 2011 (Dow Jones) GM June US Sales Climbed 10% On Strong Retail Sales

DOW JONES NEWSWIRES

General Motors Co.'s (GM) U.S. auto sales climbed 10% in June as stronger retail sales offset a planned reduction to fleet customers, with passenger cars seeing the largest gains as higher oil prices continued to influence purchasing patterns.
The auto maker's shares were up 0.2% to $30.42 in recent trading.
Car-shopping website Edmunds.com last week predicted U.S. new-vehicle sales would rise 11% overall in June from the prior year, with strength from Detroit's Big Three and Nissan Motor Co. (NSANY, 7201.TO) expected to offset declines from Japan's other top manufacturers. Edmunds predicted GM would report a 17% jump in sales.
GM reported it sold 215,358 vehicles in June, up from 195,380 a year earlier but 2.6% lower than May's total. The year-to-year growth built on a 13% increase in sales GM posted last June.
Among the four continuing brands, GMC and Buick posted sales increases of 15% and 13%, respectively. Sales of the larger Chevrolet grew 11%, although they dropped 7.9% for Cadillac.
Total sales of GM passenger cars grew 28%, while full-size pickup-truck sales climbed 5%. Crossover sales dropped 2% due to a planned reduction in sales to fleets, although retail sales were up 24%.
Retail sales increased 16%, while fleet sales fell 1%.
Month-end dealer inventory in the U.S. stood at about 605,000 units, 3.6% more than May's total and 38% above last year's inventory.
June had 26 selling days, one more than a year ago.

-By John Kell, Dow Jones Newswires; 212-416-2480; [e-mail]
(END) Dow Jones Newswires
07-01-11 1113ET
Copyright (c) 2011 Dow Jones & Company, Inc.


Chrysler June Total US Vehicle Sales 120,394, Up 30% >C.XX
12:13p ET July 1, 2011 (Dow Jones)
Chrysler June Total US Vehicle Sales 120,394, Up 30% >C.XX

(MORE TO FOLLOW) Dow Jones Newswires (212-416-2400)
07-01-11 1213ET
Copyright (c) 2011 Dow Jones & Company, Inc.

[rovo]

Go market, go. Just a little more upward movement and some of my lame ass trades will be green. I'm going to have to be more selective going forward or else get a new, improved crystal ball.

[rovo]

Looking at the charts it appears everything I hold or look at is about to roll over to the downside. Inflection point or just a pause for a day or two before increasing further? This market is so "news" oriented as to be scary.

HI is looking very strong but I still can not find anything to justify the price increase.

[rovo]

AAPL is looking very strong again with a current gain of 1.62% for the day. Ford was down a tad but recovered when the May factory orders report was released. Although the report was below expectations the Auto sector was strong.

U.S. factory orders climb 0.8% in May10:05a ET July 5, 2011 (MarketWatch)
WASHINGTON (MarketWatch) - Factory orders rose 0.8% in May to $445.3 billion after an upwardly revised decline of 0.9% in April, the Commerce Department said Tuesday. Factory orders were forecast to rise 0.9%, according to a MarketWatch poll of economists. April orders were previously reported to have fallen 1.2%. Excluding transport, new orders rose 0.2% in May. Shipments climbed 0.4%.

[IPAfan]

TTT is getting smashed, which is OK for me because I'm not in this for the short term. I'm looking for an investment that I think has a fairly limited downside (which I think TTT does because of the strong net cash position) and the ability to double over the next 3 years. If I can buy it cheaper that's fine. I don't mind the fluctuations too much, and could technically do better off buying a bigger position at even a 20-30% loss if the longer term outlooks looks better. This is a big part of my investment portfolio, but I still feel like I'd like a bigger position in the grand scheme of things.

[rovo]

It is time to do a little pumping of Apple. ;D Earnings season is approaching and analysts are altering their estimates of earnings for AAPL.

Pricing, components boosting Apple profit: analyst
7:25a ET July 6, 2011 (MarketWatch) NEW YORK (MarketWatch) -- Analysts at Sterne Agee Equity Research on Wednesday upped their third-quarter profit estimate for Apple Inc. to $5.95 a share, from $5.75 a share, based on more favorable component availability and pricing for the computer maker. "Overall component trends continue to improve (memory, NAND, and displays) through July, which has helped make pricing more favorable and we believe will benefit AAPL, which has proven in the past to be among the most adept in taking advantage of lower pricing," analysts said in a note to clients. On average, Wall Street analysts expect Apple to earn $5.70 a share, according to a survey by FactSet Research.

Boosting the estimate from $5.75 to $5.95 is a no brainer in my opinion and I'm looking for a minimum of $6.25 and most likely $6.40ish. This is against the year ago level of $3.51. The results are expected to be reported the week of July 19.

[rovo]

The port is doing quite well since the end of June. The little guys in my port are struggling but the larger holding are doing fine.

Ford (F) is my largest holding and closed on June 30th at $13.79. It is currently trading at $14.04 for a gain of 1.81%. At this point I am considering Ford to be a value stock and I'm looking for low to mid $20s.

Hillenbrand (HI) closed June at $23.65 and is currently trading at $23.95 for a gain of 1.27%. HI is rising going into the earnings report and will probably be setting new 52 week highs before the report. I'm planning on reducing my holdings in HI but I'm also expecting a good earnings report and possibly another acquisition before the end of this year. $26.25 is the 2 year high and I'm expecting this value to be challenged.

Apple (AAPL) closed June at $335.67 and is currently at $356.05 for a gain of 6.07%. This puppy is also rising in anticipation of the earnings report. I'm also considering this stock to be a value stock and very under-valued. Short term I'm expecting $400 but $500 to $550 by year end is very doable. I did expect $400 by the end of June but I guess I was just overly optimistic.

Another biggie I'm holding is TBT and I couldn't have been more wrong on the action of this ETF. The recession was longer and deeper than I expected as well as the entire world being in a funk. I'm really sucking wind on TBT but we may see some gains as some sort of budget resolution is announced. I would be very pleased just to get my original investment out of this play. No expectation of a price going forward.

The last holding in the high $ area is Microsoft (MSFT) which closed June at $26.00 and currently at $26.71 for a gain of 2.73%. I'm not expecting much out of MSFT other than a safe place to park money and a reasonable dividend of about 2.4%. The talk about some acquisitions for MSFT may drive this stock upward. This is pretty much a beached whale as far as internal growth.

So, those are the big fish in my port and my expectations for their movement.

[livinincali]

Boosting the estimate from $5.75 to $5.95 is a no brainer in my opinion and I'm looking for a minimum of $6.25 and most likely $6.40ish. This is against the year ago level of $3.51. The results are expected to be reported the week of July 19.

I'm actually expecting AAPL quarter to be on the weaker side because of the lack of the iPhone 5 in Q2 2011. I think iPhone 4 sales might slow down a bit this quarter as people are waiting for the iPhone 5 due out in Q3 2011. iPad2 sales should be pretty good, but there was supply shortages early in the quarter. I have no idea how the stock will react to earnings but certainly the bullishness has come back to the market in force after that brief selloff. The tendency does favor a sell the news event during this quarter's earnings because of the massive front run we've had before earnings, but you never now, maybe things will indeed be a lot better than some of the economic indicators have been showing.

[rovo]

To support Cali's theory:

www.macnn.com/articles/11/06/03/no.new.model.till.fall.may.hurt.summer.sales/

[rovo]

I want to post both sides of the Apple debate so here is another view more in support of my opinion.

3 high-cost tech stocks worth every penny12:01a ET July 7, 2011 (MarketWatch) ROCKVILLE, Md. (MarketWatch) -- I typically have little interest in the hottest stocks on Wall Street. There is much to be said for being fearful when others are greedy.

After all, how much buying pressure can be left to bid up a stock after every guppy on Main Street and every shark in a thousand-dollar suit owns shares?

This week, I took a look at some of the most popular tech stocks that have been surging in an effort to prove they were cruising for a crash. But the most interesting thing I found was that, in some of these cases, conventional wisdom seems to hold up quite well in these trendy trades.

These obviously aren't the kind of picks that will double your cash in a few months -- the word is out on these hot stocks and some big gains are already in the rearview mirror. But in this volatile market you may do well to "settle" for double-digit gains in these big-name stocks -- even if they are already household names.

Here are three high-priced tech stocks that are worth every penny:

Apple

At about $350 a share, Apple is one of the priciest stocks on Wall Street. But time and time again, the House that Jobs Built proves that it is just as powerful as every armchair investor claims it to be.

So is it overbought? Maybe not.

Despite the hype Apple has a forward P/E of just 12.1. By comparison, now-sluggish Google has a forward P/E of about 13.6 and Motorola Mobility is just shy of 14.1. What's more, despite a 5% run in the last several trading days, AAPL stock is still shy of its February peak of around $365. There's another 5% or so for shares to run before Apple hits a new 52-week high.

On the earnings front, Apple has been simply phenomenal, topping forecasts by a dollar a share in its last two quarterly reports. When a $320 billion company that is closely watched by experts trounces expectations so soundly, it proves it deserves some of the hype. Last quarter shares jumped 6% in two days after strong numbers were released, proving that big numbers can still cause a big move for Apple.

In regards to product development, Apple continues to innovate. Its iCloud technology could take Apple's near monopoly digital-music model to the next level, a highly anticipated iPhone 5 will launch this fall on both AT&T a nd Verizon networks, and an iPad 3 will roll out within the next year to keep Apple's tablet dominance firmly entrenched.

And last but not least, it's worth noting that nearly every analyst watching Apple has a buy on the stock. AAPL shares have a mean target of $448 and a median target of $450 according 48 brokers surveyed by Thomson/First Call. That's an average of 28% gains above current pricing.

Just about the worst you can say about Apple is that some Wall Street experts are not the fanboys they once were. Consider Oppenheimer, which recently cut its price target from $450 down to $420 based on doubts of how well the new Apple iPhone will perform with such a crowded release schedule and a late debut in 2011.

Uh oh, only 20% upside according to this target. Better run for the hills.

Apple shares are some of the priciest on Wall Street and everybody and their brother is in love with the stock. While there's certainly reason to fear herd mentality, many signs point to a buy on Apple.

[rovo]

Hillenbrand (HI): In premarket trading I'm seeing a trade of 50K shares at $24.00. This is against a 50 day SMA Volume of about 300K and a 10 day SMA Volume of 858K. Yesterday's closing price was $24.00. This trade occurred before the terrible jobs report this morning. Something is happening with / at HI but I don't have a clue as to what it is.

[rovo]

Sold off the 100 shares of AAPL I had in my taxable account. Sold at $357.00, bought at $333.30. I'm expecting AAPL to dip again as it did at the open and I'll be buying it back if it does dip again.

[rovo]

Apple appears to have peaked at 359.89 and has reversed to a downward short term trend. I'll be re-buying my shares if it goes back down to around 353.

[rovo]

I put a buy order in for the 100 shares of AAPL I sold the other day. Buy 100 at $350.00. I'm holding firm on the 800 shares of Apple I have in the other account.

[rovo]

Silver appears to be tanking today with a loss of 2.4% at this time. I can't find anything to justify the decline. What am I missing?

[yclept]

Maybe the world is beginning to recognize "precious metals" as the nearly useless elements they have always been. At any rate, it's certainly good for your ZSL holding. Now if the world will only wake up to the inevitability of massive interest increases and light the fuse on our TBT rocket, sanity will have overcome fear, and that which had been feared will become reality! Once real, it need no longer be feared, only rued. I think the election of 2010 will be looked back to with more regret than even those of 2000 and 2004, both of which sowed the seeds of our current bitter harvest.

[rovo]

Today's order for the 100 shares of AAPL is 345.10. I figured I may see a down-spike and be able to replace those shares sold earlier. It just spiked downward to 348.62 with high volume. It was a very fast decline, on the order of 2 minutes for a large dollar drop.

Silver has taken another step down this morning but I still can't find any particular news item to account for the drop. Rumors are flying fast and furious about the EU and what they will do, will not do, will do, blah, blah, blah.