Apple: Don't Ignore This Billion-Dollar Buy Signal

Apple's earnings disappointment creates an opportunity for long-term investors.

Jan 28, 2014 at 7:00PM

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.

U.S. stocks managed to break a three-day losing streak today, as the benchmark S&P 500 index rose 0.6% on Wednesday. The narrower Dow Jones Industrial Average (DJINDICES:^DJI) also gained 0.6%. One stock that bucked the trend was the S&P 500's largest weighting, Apple (NASDAQ:AAPL), but if you think that's a problem, you need to keep reading.

Images

Yesterday evening, in the wake of Apple's "disappointing" after-hours earnings release, I argued that Wall Street's disappointment could be long-term investors' opportunity:

Last Wednesday, legendary investor Carl Icahn tweeted that he had bought $500 million worth of Apple shares within the past two weeks. Thursday, he again took to Twitter to announce that he had added another $500 million worth that very day, bringing his total position to $3.6 billion. If today's after-hours action is any indication, investors will get the opportunity to buy shares at a discount to the price this wily billionaire paid on a billion-dollar commitment. Just remember: Carl Icahn didn't accumulate a $20 billion fortune listening to Wall Street weathervanes.

Yesterday's after-hours session turned out to be predictive, as Apple's stock opened down 7.6% today and finished the session down 8%. I don't know if any of my readers took advantage of the opportunity, but one large investor did: Carl Icahn himself. This morning, he tweeted:

Just bought $500 mln more $AAPL shares. My buying seems to be going neck-and-neck with Apple's buyback program, but hope they win that race.

— Carl Icahn (@Carl_C_Icahn) January 28, 2014

It's plainly the case of a savvy investor being opportunistic, but don't take my word for it -- CNBC's Scott Wapner spoke to Carl Icahn before tweeting this:

Of $AAPL, @Carl_C_Icahn says over the years he's made a great deal of money buying on these dips esp when reason for dip is misinterpreted.

— Scott Wapner (@ScottWapnerCNBC) January 28, 2014

Furthermore, Icahn was energized by one of the topics from Apple's earnings call:

@Carl_C_Icahn tells me there was a major positive in $AAPL's message yesterday-new products in new categories coming within the year.

— Scott Wapner (@ScottWapnerCNBC) January 28, 2014

When he was asked about new product categories on yesterday's call, Apple CEO Tim Cook said:

[Apple's innovation cycle] has never been stronger. I'm very confident with the work that's going on, and I think our customers are going to love what we're going to do. ... We have zero issue coming up with things we want to do that we think we can disrupt in a major way. The challenge is always to focus to the very few that deserve all of our energy. And we've always done that, and we're continuing to do that.

Icahn went on to tell Wapner that Apple's long-term picture is completely unchanged, i.e., while fiscal first-quarter iPhone sales and fiscal second-quarter revenue and profits guidance may have fallen short of Wall Street's expectations, the company's long-term prospects are just as good as they've ever been.

Given the randomness in daily stock price movements, investors have roughly even odds of witnessing even better prices tomorrow. This is your second alert: Apple shares are worth looking at now.

Better than Apple: The one stock you must own for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Alex Dumortier, CFA, has no position in any stocks mentioned; you can follow him on Twitter: @longrunreturns. The Motley Fool recommends and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. 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.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers