2 Technology Stocks To Watch: Apple and Yahoo!

Earnings season: Apple disappoints, while Yahoo! needs to impress.

Jan 28, 2014 at 10:15AM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Following three straight days of declines, U.S. stocks opened higher on Tuesday, with the S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI)both up 0.56% at 10:15 a.m. EST. Earnings season continues, with two technology stocks figuring prominently on the market's dashboard today: Apple (NASDAQ:AAPL) and Yahoo! (NASDAQ:YHOO).

The world's most valuable company, Apple, reported its fiscal first-quarter results after yesterday's market close. Although the company came in ahead of Wall Street's forecasts on revenue and earnings per share, investors pummeled the stock in the after-hours session and they're doing the same this morning, sending Apple down 7.3% at 10:15 a.m. EST. The market is apparently taking exception to iPhone unit sales of 51 million in the quarter (analysts were expecting 55 million), as well as guidance for the second quarter that fell at least $1 short of the $10.93 consensus estimate.

If you think that's bad news, consider that the market's (over)reaction provides patient investors with what looks like an attractive entry point -- as I pointed out yesterday, this morning's prices are below Carl Icahn's cost basis on the billion-dollar commitment he made to Apple shares this month.

Yahoo! will report its fourth-quarter results after today's market close, providing investors with some insight into the health of the online advertising market. (Facebook shareholders are waiting -- and watching -- in the wings, as the social networking company reports after tomorrow's market close.)

Although Yahoo! stock doubled last year, the company's share of the digital advertising market slipped from 6.8% to 5.9% in 2013, with Facebook taking its second spot (behind Google). At the Consumer Electronics Show this month, Yahoo! introduced three new ad products intended to arrest that decline. However, it appears that CEO Marissa Mayer's leadership may be at a crossroads (to paraphrase the title of a useful Financial Times slideshow -- sign-up may be required). Yahoo! lost two top lieutenants in the space of a week this month: COO Henrique de Castro, who Mayer had hired away from her former employer, Google, and Editor-in-Chief Jai Singh.

Investors will be looking for reassurance that these departures are not indicative of broader discontent with Mayer's leadership and for more evidence that her turnaround strategy is yielding tangible results.

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Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool recommends Apple and Yahoo!. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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