The market is down over 3% today. Once again investors are fleeing stocks in droves. This time the main reason is weak earnings.
Corporations are reporting results in droves. The news is not all that bad on the surface considering the economic conditions. That being said, the market is focused on the future and there guidance has been disappointing.
To the extent you even get guidance, almost every company reporting earnings is including statements that the economy is bad and that business will suffer as a result. It is no surprise as the negativity in the markets allows corporations to visit the confessional without having to suffer the consequences.
Imagine making such statements during a stronger economy or positive market environment? These companies would be crushed with such negativity. Instead pervasive negativity allows companies to set the bar low for the future.
Doing so is a wise strategy during an economic downturn. It is also a bit of a cop-out for management that should be expected to perform irrespective of the operating environment.
For investors in this market, it is incredibly important to find companies that can swim against the tide. There is simply too much risk for more downside corrections. Are there companies that you must own irrespective of the operating environment?
I would say there is one: Apple, Inc. (AAPL)…
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For the last several years the upstart computer company demonstrated an ability to define markets. From the colorful packaging of its notebook computers to the complete revolution of the music world with its digital music playing I-Pod, AAPL is a proven winner.
Investors reacted accordingly making AAPL one of the best performing stocks in recent history. The stock moved unabated from the single digits five years ago to a peak of more than $200 per share.
I made AAPL one of my top picks for 2007 when the stock was trading for approximately $80 per share. No matter that the stock had already made huge gains, there was more to be had in my opinion.
Since the stock more than doubled in value from that point I would say I was correct with that analysis. Never in my mind did I think the stock would trade for less than $100 again. Given that the company was continuing to innovate and dominate its markets, there would be no chance to buy this stock at a discount.
Thank god for the credit crisis. The turmoil in the market shaved 50% or more in value from AAPL. During this time all the company did was perform and perform well. Go figure.
I wouldn’t complain about the discount. Use it as an opportunity to acquire shares in what should be a must have stock for any long term stock portfolio. Tuesday’s earnings release should convince you of the opportunity.
They absolutely crushed the number and though they tempered enthusiasm for the next quarter the outlook for the future is very bright. The I-Phone has been a big winner and is looking to be the must have electronic for this coming holiday season.
If the economy shows any kind of strength, AAPL could double from current levels. That is something I would be willing to bet on.
This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.
