Each week, I endeavor to 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. Apple (AAPL 1.19%) has caused the most trouble over the past several months. Count this week's 3.5 percentage-point drop as the latest dip.
Apple's stock price has fallen more than 33% over the past 12 months and is down 20% year to date, despite an 8% rise in the S&P 500. Holding in hopes of seeing CEO Tim Cook and his team make good on long-promised innovations in delivering televised entertainment has cost me dearly.
Bullish investors will nevertheless tell you that Apple stock looks like a bargain at current prices. They're right. Google and Microsoft (MSFT 1.45%) both trade at a noticeable premium to Apple when you factor in liquid assets:
AAPL Price to Earnings Less Cash TTM data by YCharts.
Selling now would amount to declaring that the Mac maker is incapable of generating even 10% annual earnings growth for the foreseeable future. Analysts are modeling for 18.9% annual gains over the next five years, according to Yahoo! Finance.
A decade of investing has taught me that winning is less a matter of wits and more a matter of willpower. Apple is testing my will to hold, so I shall.
What's the Big Idea this week?
Elsewhere, Google and Riverbed Technology barely budged as my other two tech holdings plunged, costing me another 420 basis points in my three-year battle with Mr. Market. Among the indexes, only the Dow reported a marginal 0.19% gain.
This time, the Russell 2000 led the laggards with a 2.72% decline, followed by the Nasdaq's 1.30% drop, and the S&P 500's 0.59% dip, according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Thursday's close:
|
Company |
Starting Price* |
Recent Price |
Total Return |
|
Apple |
$416.26** |
$427.72 |
2.8% |
|
|
$650.09 |
$795.07 |
22.3% |
|
Rackspace Hosting |
$41.65 |
$46.86 |
12.5% |
|
Riverbed Technology |
$25.95 |
$14.96 |
(42.4%) |
|
Salesforce.com |
$100.93 |
$166.41 |
64.9% |
|
AVERAGE RETURN |
-- |
-- |
12.02% |
|
S&P 500 SPDR |
$124.39** |
$155.86 |
25.29% |
|
DIFFERENCE |
-- |
-- |
(13.27%) |
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:
-
Facebook (FB 0.37%) took its fight with Google to next level by introducing "Home," an overlay for Android phones that assumes control of a handset's home and lock screen. An accompanying "cover feed" reveals what friends are up to while making chat accessible from any app or screen.
-
Tesla Motors (TSLA 0.26%) soared this week after the company said Model S sales came in at 4,750, above the 4,500 projected earlier. The company also forecast a surprise first-quarter profit. Tesla next reports earnings on May 6.
-
Finally, in yet another sign of weakness in the telecom sector, F5 Networks (FFIV 0.01%) on Thursday night lowered second quarter-guidance because of sharp declines in sales to carriers to federal agencies. Revenue is now expected to fall sequentially and grow just 3% year over year. The stock fell more than 17% in Friday morning trading.
What's caught your eye in the tech world? Do you believe Apple's stock price will rebound ahead of earnings, or are we in for more losses? Let us know what you think in the comments box below.
