This Apple Sell-Off Is Getting Out of Hand

Each week, I report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with me beating the index's average return by 13.35%.

Real money was on the line then as it is now, which means any one of the five stocks you see below could cause me a lot of public embarrassment. This time, Apple (NASDAQ: AAPL  ) slumped as salesforce.com (NYSE: CRM  ) soared.

Let's address Salesforce first. Shares zoomed more than 7% to a new all-time high after the company reported better-than-expected fourth-quarter results. Revenue came in nearly $4 million ahead of estimates while per-share earnings beat the consensus by more than $0.11.

Salesforce also reported a 59% year-over-year increase in contracted work in the pipeline -- now $3.5 billion, up from $2.2 billion at this time last year. Current deferred revenue (i.e., work billed but not yet recognized on the income statement) rose 39% as a growing number of large companies deploy software in the cloud.

And yet Apple remains the bigger story. The stock touched a 52-week low Friday only to see even lower prices in Monday trading. Skeptics have taken to the markets to proclaim the end of Apple's dominance of the smartphone and tablet markets. Others simply disapprove of CEO Tim Cook's tightfistedness when it comes to the Mac maker's growing cash pile.

I've no complaints. In fact, I've been thinking of adding to my Apple stake for a while. If I've yet to pull the trigger it's because there are so many interesting opportunities right now. And yet I can't help wondering if I'm missing out: at just 8.4 times next year's average earnings estimate, today's buyers may be getting the earnings potential of Apple's "Next Big Thing" -- whether it's  a TV, a watch, or a cheap iPhone -- for free.

What's the Big Idea this week?
Fortunately, Salesforce's surge more than compensated for Apple's apathy last week. My five tech stocks cut Mr. Market's lead by 118 basis points from the week prior. Not bad for these turbulent times.

Indexes mostly improved. All but the small-cap Russell 2000 moved higher, led by the Dow Jones Industrial Average and its 0.64% gain. The Nasdaq and S&P 500 eked out gains of 0.25% and 0.17%, respectively, as the Russell fell 0.16%, according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Friday's close:

Company

Starting Price*

Recent Price

Total Return

Apple

$416.26

$430.47

3.4%

Google

$650.09

$806.19

24%

Rackspace Hosting

$41.65

$56.11

34.7%

Riverbed Technology

$25.95

$15.15

(41.6%)

Salesforce

$100.93

$182.00

80.3%

AVERAGE RETURN

--

--

20.16%

S&P 500 SPDR

$124.94**

$152.11

21.75%

DIFFERENCE

--

--

(1.59)%

Source: Yahoo! Finance. *Tracking began at market close on Jan. 6, 2012. **Adjusted for dividends and other returns of capital.

Notable newsmakers
Among the other tech stocks making news last week:

  • LinkedIn (NYSE: LNKD  ) touched a new all-time high last week, and is still rallying today on news of the platform seeing increased use in sales engagements and for content marketing such as company whitepapers and sponsored posts. All signs point to LinkedIn growing to become much more than it is today.
  • Groupon (NASDAQ: GRPN  ) enjoyed gains after its board fired co-founder Andrew Mason as chief executive. His departing letter to staff has since been made public, and offers no apologies for a strategy that seemed to me doomed from the beginning. Instead, Mason said he was "in the way" of the market giving his company a second chance to execute.
  • Finally, at the annual Mobile World Congress conference in Barcelona, Spain, the non-profit Mozilla Foundation made good on threats to transform its browser into a mobile operating system while LG Display announced plans to purchase webOS for creating an interactive television experience. Incumbents may find it tougher to grow in 2013.

What caught your eye in the tech world last week? Would you buy Apple at current prices? The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, has the skinny on the various reasons to buy or sell Apple right now. Click here to get his latest thinking on the stock  and what opportunities are left for Apple (and your portfolio) going forward.


Read/Post Comments (4) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 04, 2013, at 8:27 PM, myeerah wrote:

    I love all the negative news about apple because it keeps giving me an opportunity to buy more shares.I now own 428 shares and I believe this an opportunity of a life time.Nothing is ever certain but I believe in apple and Cook.It is ridiculous that the share price has been hammered like this.I believe it is pure market manipulation.Hedge funds have the capital to drive shares down and then drive the share price back up.Underperforming hedge funds work together to do this.I know a man that worked at a hedge fund and got out because of the unethical practices going on.Most hedge funds operate on insider information.If anyone is interested go to YouTube and in the search section put in Jim Cramer market manipulation.Apple will come out with something big.They have the cash for stock buy backs or to acquire a company that will help them grow or help sell there products.The television set has not seen real innovation over the years.Sure we can buy a movie or tape a show but nothing huge has really changed.I believe the out of the box thinkers at Apple are thinking big.Apple and its products are part of the American fabric and will not being going away, they will just get bigger and move into other arenas.A deal with China mobile I believe is next.Growth will explode.Apple is the gold standard and for people who want the best will always flock to Apple products.LONG APPLE!

  • Report this Comment On March 04, 2013, at 9:41 PM, tychicum wrote:

    I agree with myeerah.

    When your barber tells you to buy something because it is all the talk ... it is time to sell.

    When your barber tells you to get out of a stock because it is all the talk ... it is time to buy.

    The barber has been talking sell Apple ...

    The stock is almost down to the value of the day Tim Cook took over Apple when it closed at $374 per share. Tim took it up once he will take it up again. I think he is pissed. Nothing equates to a CEO of Apple's when they get pissed off. They just get even ...

  • Report this Comment On March 04, 2013, at 10:46 PM, buddyglee wrote:

    Love your responses . iPhone has lost mindshare but that's a easy fix with a larger version

  • Report this Comment On March 05, 2013, at 9:30 PM, EmFetch267 wrote:

    I also agree with myeerah. Apple works. The company has so much cash on its hands it is ridiculous. Every stock gets beaten down, but they also recover if they're able to support their price. THis company works!!

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