This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Best of Kass

Stocks in this article: AAPL

Since I expressed my initial concerns in late September, Apple's shares have fallen by $165.

The shares now stand at $536, and I am buying.

Now let me explain why I have just purchased shares in Apple (my answers correspond to the list of concerns listed at the beginning of this column):

  • As expressed in today's opening missive and in my writings over the last few weeks, I am now less concerned about a global economic slowdown than most.
  • Investors are no longer smug and have grown increasingly (and arguably fully) aware of the challenges of the delivery of current and future new products.
  • Apple's shares are no longer the beneficiary of fund flows -- just the opposite has been occurring, which has materially pressured the shares down to attractive levels.
  • At $700, Mr. Apple Orchard -- er -- Mr. Market was likely imputing a 2013 new "wow" product (Apple TV?). At current prices, the next "wow" product has been discounted away, and the company's completely refreshed product line (no mean feat in such a short time frame, and if supply comes in line, CEO Tim Cook's main goal for 2013) should be plenty enough new stuff to once again propel earnings throughout 2013. Also, here is a link to AppleInsider, which hints about a possible new product associated with the automotive industry.
  • At $536 a share, a discounted dividend model implies that the future growth rate in profits at Apple will be only about 5%. This is too low -- Apple's share price decline has likely now overly discounted most (if not all) of my concerns.

At the time of publication, Kass was long Apple.

Global Warming
Originally published on Friday, Nov. 9 at 7:14 a.m. EDT.

  • Prospects for China soft landing and global growth improve.
  • October Chinese consumer inflation rose by only 1.7% year over year compared to estimates of 1.9% and 1.9% in September.

    This was the slowest rise in almost three years, as food inflation slowed dramatically to only 1.8%. (September print was 2.5%.)

    A low inflation rate is important as it allows the central bank the ability to ease further. That said, retail sales (up 14.5%) and industrial production (up 9.6%) accelerated in October, so no near-term moves are likely.

    The low rate of consumer inflation gives the People's Bank of China the leeway to ease further, but recent data (industrial production/retail sales) accelerated last month, which allows the central bank to watch/wait and see.

    In summary, the risk of a global economic cliff has receded in the last two weeks as economic data from the U.S. and China have improved, and the EU data (despite the hyperbole) have stabilized (off of low levels).

    In other words, the world, it seems is not coming to an end, though it might feel like it is the case when looking at the U.S. stock market.

    Technically, the market has clearly entered brokedown palace, and my next column (an update of George Lindsay's "Three Peaks and a Domed House") is sure to scare the crap of you and raise questions as to where Mr. Market will bottom.

    However, if fear is the friend of the rational buyer, numerous opportunities for the long-term investor are likely developing.

    Finally, with regard to the fiscal cliff, I am working on my analysis over the weekend and will come up with my conclusions in Monday's opening missive.

    At the time of publication, Kass had no positions in stocks mentioned.

    Doug Kass is the president of Seabreeze Partners Management Inc. Under no circumstances does this information represent a recommendation to buy, sell or hold any security.

    2 of 2

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    Try it NOW
    Try it NOW
    Try it NOW

    Check Out Our Best Services for Investors

    Dividend Stock Advisor

    Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Options Profits

    Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

    Product Features:
    • Actionable options commentary and news
    • Real-time trading community
    Try it NOW
    Try it NOW
    Try it NOW
    To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
    Submit an article to us!


    DOW 17,672.60 -141.38 -0.79%
    S&P 500 2,051.82 -11.33 -0.55%
    NASDAQ 4,757.8790 +7.4820 0.16%

    Partners Compare Online Brokers

    Free Reports

    Free Newsletters from TheStreet

    My Subscriptions:

    After the Bell

    Before the Bell

    Booyah! Newsletter

    Midday Bell

    TheStreet Top 10 Stories

    Winners & Losers

    Register for Newsletters
    Top Rated Stocks Top Rated Funds Top Rated ETFs