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business newsBeware of the Potentially Poisonous Apple
Even a semi-serious stumble could send Apple's stock down.
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Here’s what I'm seeing this morning:
Apple (AAPL):
The company was out with its second-quarter numbers last night after the bell and it was simply a stellar quarter. In the period, it put $3.33 a share on the scoreboard, which was a nautical mile north of the $2.45 analysts had been figuring on. It pummeled the expectations on the top line, too.
Some brief thoughts:
1. I'm not sure "stellar" gives the numbers their due. This was a totally unexpected performance and I'd be surprised if the shares didn't open higher this morning.
2. But might this result turn out to be a double-edged sword? Hear me out Apple disciples. Investors already expect the company to thump estimates quarter in and quarter out. But now, its cult-like following is going to expect insane beats, which clearly can't keep going on in every period forever. And only so many people are going to buy iPods, iPads, and Macs. Even a semi-serious stumble could send this stock down.
3. While I see a trade here, I get nervous when it seems like a company can do no wrong.
Yahoo (YHOO):
Excluding items, the company kicked out $0.15 a share in the first quarter. Analysts had been looking for $0.09. But don't jump up and down just yet. Its net revenues came in at $1.13 billion, which looked a bit light.
Some other thoughts:1. I'm still a Carol Bartz fan and would much rather have her steering this boat than Jerry Yang. (In fact, I wonder if Yang ever kicks himself for not cozying up more with Microsoft (MSFT).)
2. I’d like to see that top line get gassed up a little more because that's when interest in the shares could really percolate.
3. Will most eyeballs be on Yahoo or Apple today?
4. At $18-plus, I don’t see a bargain here. But if it sells off and ultimately trades under $17, it may be worthy of some loving.
Panera Bread (PNRA):
The bakery-cafe chain was out with some tasty news after the bell last night.
Per the release: “Based on the strength of its comparable bakery-cafe sales growth for the first quarter of fiscal 2010, the Company has today raised its earnings per diluted share target to $0.81 to $0.82 for the first quarter ended March 30, 2010.” It also goosed its full-year outlook.
My thoughts:
1. The company is performing well in this still-lousy environment despite some heavy competition for our lunch and dinner coin, so it deserves credit for that. But from an investment standpoint, I find it difficult to get excited about. The miser in me feels that at more than 20-times next year’s estimate, there’s isn’t a whole lot of upside potential from here.
2. I have no plans to belly up on the heels of this news. I’m much more excited about Starbucks (SBUX), which seems to really be getting its act together; it’s been on a nice little roll recently as evidenced by a recent chart.
3. As an aside, although I know most don’t consider it a direct competitor with Panera, I feel compelled to mention McDonald’s (MCD) because it operates in many of the same general markets. I remain upbeat on Mickey D’s prospects as I still see plenty of growth potential abroad and here in the US. I’d much rather be situated here, too.
Ciena (CIEN): Justin Sharon points out this fine day that Soleil lopped its rating on the one-time high-flier to Sell.
1. I’ve been a bear on it for a while now and nothing has changed on that front. The earnings outlook this year and next is just too paltry for me to really get interested. (See Ciena Stock on a Roll But Investors Shouldn't Chase.)
2. I won’t be bellying up -- and that’s even if the shares do take a hit on the heels of this news, as I expect they will. If it were to get down to $10 or $11 though, I’d be a smidge more interested. Face it -- there are better opportunities out there.
Have a great day!
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