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TheStreet Open House

2013 Predictions: Twitter's IPO, Apple's Evolution, Europe's Implosion and Obama's Big Year (Update 1)

Brian Sozzi, contributor to TheStreet and Chief Equities Analyst at NBG Productions:

"Forearm to throat, Apple shares stand to be higher on Jan. 1, 2014, than they are today, even though its product pipeline is being skewed toward evolutionary rather than revolutionary. In turn, Apple will win from its reputation among consumers, which should create strong global volume, plus a lower cost base."

"However, I want to rock out in 2013 by seeking a company that has guided to a new product or service that could be surprisingly influential on profits, with the Street caring little in the present. One such name is Take-Two Interactive (TTWO), which trades at five times forward earnings in front of a major launch of a new iteration of its Grand Theft Auto title. Additionally, I have been quite pleased by the strength of the company's catalog business. The company could also see further benefit from a smaller rival, THQI (THQ), being forced to close up shop due to financial troubles."



Timothy Collins, RealMoney contributor:

"I feel conservative saying 2013 is bound to offer up several more surprises as 2012 did. Sure, we all saw Europe, but the fiscal cliff became a December holiday gift no one wanted and everyone was sick of hearing about by the beginning of December. There looks to be a solid chance that conversation will continue into early 2013, but I don't consider that a very bold prediction."

"The market is born of predictions. It's a game with four quarters, so it's time to break it down."

"Q1: U.S. Treasuries begin a tumultuous year that will see everyone's favorite short, the iShares Barclays 20+ Year U.S. Treasury Fund (TLT) fall 20% for the year with more than a fair share of the drop occurring in the first quarter. The action in the long-dated Treasuries will become inversely correlated with the unemployment rate. Every 10th of a percent drop in the unemployment rate will hit TLT for at least 1% to 2% in price. A drop below 7% will send TLT bulls running to the sidelines.

"Q2: Although the unemployment rate declines, it is due more to the labor force shrinking. This causes the Fed to adjust its quantitative easing program before the end of quarter two to focus more on the MBS market than Treasuries in hopes of stabilizing the dollar and avoiding holding too much paper, which is losing value (see Q1 prediction). Rumors start to swirl that the Fed will expand its purchase program beyond the Treasury and MBS markets."

"Q3: Energy makes a remarkable move during 2013 highlighted in quarter three, as the dollar continues to struggle. Ironically, it is coal that moves to the forefront, followed closely by natural gas. With the economy stagnating, energy sources plentiful here in the United States take the forefront as an answer for a much needed economic boost. Energy costs start to decline while jobs are created. Optimism grows that energy is a primary solution to turning the tide in the trade deficit."

Q4: Twitter does something Facebook (FB) could not do: It stages a highly successful IPO, and its shares surge 50% from its offering price. The market places a $20 billion to $25 billion valuation on the company. Not to be outdone, FB breaks above its original IPO price of $38 some 18 months after coming public. It ends the year up 50%, making it one of the biggest winners in the Nasdaq 100, even outperforming Apple.

(Positions: Long TLT straddles, FB call spreads, AAPL put spreads.)

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