Sell Apple, Buy Microsoft
This column was originally published on RealMoney on June 6 at 12:02 p.m. EDT. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
Apple (AAPL) has won the hearts and minds of the younger generation in recent years, with its ubiquitous iPod opening the door to market share gains for its less popular desktop computers. Rival Microsoft (MSFT) has responded with the Zune, an odd device trying to challenge the iPod's near monopoly on teenage coolness.
Of course, the Zune will never threaten the iPod's sales dominance, but you can't fault Microsoft for trying. Indeed, the company has been in the knock-off business for generations, trying to mimic the best ideas of other companies rather than use originality or creativity to book its immense profits.
It's no secret that Apple's stock has wiped the floor with Microsoft's shares in recent years. While the pride of Redmond, Wash., is still trading within the narrow boundaries of a six-year range, Steve Jobs' garage project has marched up to all-time highs. And Apple has gone absolutely ballistic this quarter, ahead of the late-June release of its long awaited iPhone.
So now is the perfect time to sell Apple and buy Microsoft.Say what? Why would I recommend exchanging a rocket ship for a pellet gun? Let's put it this way: It's likely that Microsoft will outperform Apple by a wide margin in the next six to 12 months. As I'll point out in my chart review, Apple may be nearing the end of its fabulous rally while Microsoft is on the verge of a multiyear breakout. Before I get hate mail, let me point out that I've been an Apple bull for many months. Last December I predicted the current breakout while taking a dim view of Microsoft's 2007 prospects. That bearishness hit the mark, considering that Mr. Softee is trading just two points higher than on the day that column was published. But things have changed considerably since that time. Recent price action points to a major sell-the-news reaction when Apple's iPhone is finally released. On the other hand, Microsoft shares are nearing price levels that could support a sharp thrust to higher ground. Let's see how this is all playing out in the long-term price patterns.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV