My Own Analyst

INTC Q4 Outlook

Intel guided sales reasonably well for Q4 after reporting an alright Q3 compared to the consensus, but the stock, initially stronger, is under some pressure because of gross margin guidance.  The CFO just explained that it's a one-time issue as the company uses the soft environment to retool several production lines to its latest technologies.  I think that below 22, INTC is a buy for a trade (and for investment!)...

Thoughts on AAPL

Everyone is all freaked out over AAPL - I actually think it's positive.  One of the more unhealthier aspects of the market in 2012 has been the strength of AAPL.  It has accounted for about 2% of the 16% price increase in the S&P 500.

When I last commented, I pointed out that the stock was a black 1 but likely to be ok.  It went on to make a new all-time high before moving to what is now a lower level.  The good news, from a technical perspective, is that it is no longer a black 1.  You may recall that AAPL pulled back in April, from 644 to 522 (about 20%).  So, today's now 10% move isn't so bad.  At that time, AAPL was a black 1 too.  The ultimate low of 522 was about 8% above the 150dma at the time.  Today's 630 is only 3% above the 150dma.  

Longer-term, AAPL is getting a bit tired in my view.  The 700 level could prove to be the high for 2012 and maybe well into 2013.  Does that mean it's a sell now?  Probably not.  Is this bad for the market?  There, I am much more confident:  The market can rally without AAPL.  As I look at the chart, I think AAPL can bounce near 600-610.  I think it's best to assume that AAPL, which is still up 50% or so this year, isn't likely to be a leader going forward.  This is a good thing...

Waiting for an Apple Pullback?

Keep waiting!  The stock had already paused in front of the scheduled product announcement, and it's likely good enough to keep the stock aloft at least until mid-October, when they report Q3.  It's scary to me how much attention a product gets - certainly a longer-term cautious sign regarding investor sentiment, but the stock isn't expensive if it hits projected numbers.  Their year ends in September, and analysts think that they can grow EPS by 20% on sales growth of 24% in FY13.  It's odd to see lower projected margins.  At 675, the stock trades at 13PE, and that's not including the fact that they have a ton of cash.  Plus, they use pure GAAP - no options expense exclusion.  Their accounting is pristine.

So, I don't expect a sharp contraction, but I would note that it becomes a black 1 next week.  Not sure that it means anything in the near-term - the stock is likely to defy that rule.

Shocking News from INTC

Early morning sarcasm in the title - INTC pre-announced Q3, with sales of 12.9-13.5 vs. guidance of 13.8-14.8 billion.  The consensus was 14.23.  I had expected this and still added to INTC in CG/B on Tuesday.  The stock is down to 24.50 (2.2%).  We'll see how it plays out, but this is likely a very nice spot to buy the stock, which peaked above 29 in early May.  The stock is trading at <10PE when one accounts for the cash and offers a fat dividend of 3.6%.

Why CSCO is Falling

Yesterday, they announced a 2% targeted workforce reduction, but that's not the problem.  Last night, VMW announced a $1 billion acquisition of a company that could inflict some damage on CSCO and JNPR from what I read.  I am really tired of CSCO (and large-cap tech).  

GOOG: Page Can't Talk, but the Results Do

This was a complex quarter given the partial Motorola inclusion, but it looks like GOOG overcame a lot of headwinds (Europe, declinging click costs) to post numbers basically in line.  The stock has responded favorably given all of the fears that had been priced in.  I want to own GOOG LT (it's in the Top 20), but, as I put in writing last week, the new class of shares being issued is a technical problem for the stock.  The good news is that we can punt for now - the whole thing is tied up in litigation.  

My technical read is 615 break leads to 650 print.  Not so sure we break 615 though, at least today.  My target there is going up a little due to more net cash than I had projected - 850 -->868 based on 15 PE plus 119 cash (but discounted by 5% to account for the C shares that I believe will have a 10% discount.

JPM Question

Carlos wants to know what I think of JPM below 35 after the slight pullback.  I think that there is a lot of fear about the size of the loss, and I don't think it matters one way or the other, as this is a "one-time" event.  I see big support near 34 and think it can get to 39 after they report.

Why CSCO is Rallying

I reviewed the JBL call and they apparently had good things to say about CSCO without saying "Cisco", pointing to favorable trends in their Enterprise Infrastructure division.  This led, I believe, to the marginal target change (20-->21) and upgrade from neutral to buy by BMO.  By the way, JBL was interesting because the stock has reacted well to bad near-term news, probably because they are suggesting a strong November quarter.  I still think the ADBE bad news should be viewed as an opportunity for entry.  

Where can CSCO go?  Right now, it's at 17.60, down from the 18.50 area where it gapped to as low as 15.92 following their last earnings report.  As I mentioned this weekend, the earnings estimates for their July 2013 year didn't really change dramatically:  1.99 was the peak in April, and they are now 1.91.  What a cheap stock!  Trading at less than 10PE before considering the cash.  

The high on CSCO was 21.30.  As I look at the current chart, 20 seems to be the next big resistance assuming it fills the gap to 18.50.  I know some of you do options.  The current set-up would seem to suggest a synthetic long:  Sell the 16 puts in September for .38 to buy 19 calls at .33.  With this small credit, you get long CSCO just below 19 with a shot at 20 and maybe back to the highs by the next quad witch.  A more aggressive way to get long without paying much is to sell the Sep 16 put at at .39, buy the Sep 18 Call at .67 and sell the Sep 20 Call at .13.  This costs .15 (plus commission) but pays off at $2 if it gets to the $20 level in three months.  I see a lot of support now at 16.50, so selling the 17Put at .70 instead of the 16 put turns the trade into a credit.

JNJ: Multiple Upgrades

Everyone and their brother appears to be jumping on the JNJ bandwagon today following updated guidance related to the Synthes acquisition and a big accelerated share repurchase.  I think that the stock is very cheap - it's been in CG/B  since 2008.  It hasn't been a good stock at all so far, but maybe this is finally its time.  The dividend yield is near 4%, and the stock trades at about 12 PE.

FB Scare

The open of FB was not unexpected at up about 10%, but the plunge to 38, the IPO price, sure didn't inspire confidence in the company or in the markets.  There was some talk that there was uncertainty on order fills on the opening trade that may have contributed to the plunge.  Someone sold stock at 38 - bet they feel foolish....

I think that the stock could close above the open (call it better than 42).