In the past three months, Apple (NASDAQ:AAPL) is down more than 20%, while International Paper (NYSE:IP) is up more than 20%, creating almost a perfect-pairs trade. Even if you extend the picture out since the start of 2012, Apple's underpformance only widens; International Paper has returned more than 55%, while Apple is up less than 10%.
The key idea here is that it could be surprising to many investors to see Apple, the leading mobile disruptor, underperforming an industry like paper. The Office was created with a paper sales office instead of one with hot-shot product designers for a reason.
Yet in the following video, the Fool's Eric Bleeker says there are plenty of lessons to be drawn from Apple and International Paper. First, he notes that International Paper's earnings were off a good amount in 2012, while Apple sees investors fretting about growth after it turned in 27% earnings growth. That's an illustration that in the short run, companies are driven by perception more than by anything else. Apple is declining right now because investors are paying an increasingly smaller P/E for the company. Likewise for International Paper: Investors are taking a brighter view of the future and paying a higher P/E in spite of last year's earnings decline.
Why are investors excited about International Paper? Because of its focus on corrugated paper, which presents emerging-market opportunities and management's focus on returning capital to shareholders.
What are the two areas investors are focusing most on with Apple right now? The ability to capture emerging-market growth, and what it'll do with all its cash. Eric says that while most Apple investors aren't seeking out the next great opportunity in paper, there's a lot to be learned from International Paper. Most of all, if Apple can make the right moves in the next year on those two areas, how quickly could its share price rebound?
To see Eric's full thoughts, watch the video.