All about Apple.
My former softball teammate to me in text last night: "almost dipped into my retirement account to buy some Apple (AAPL) - Get Report -- woo Apple one trillion." Such are the texts from friends when you work in this type of field. I never give investing advice to friends/family, but couldn't help but to think: "bro, go ahead and make that move."
Apple at $1 trillion is a stepping stone to the 15 or 20 year march to a $2 trillion valuation for the company. Keep in mind we have no clue what Apple is working on deep in its spaceship Cupertino campus. Robot dogs? Autonomous flying bikes? An iPhone that is solar, wind and motion powered? The point is that Apple has done more than enough to assign it an even higher price to earnings multiple based on a robust stream of future earnings.
In fact, using robust -- but seemingly reasonable estimates in my humble opinion -- Apple's valuation could end 2019 at $1.4 trillion. Only $600 billion away at that point. Meanwhile, great column by our Jim Cramer on Real Money on Apple one trillion. It's quite meaningful, Cramer says.
Don't Get Hosed
Foot Locker's (FL) - Get Report days as a market darling have died following a series of challenging quarters. Morgan Stanley retail analyst Kimberly Greenberger thinks Foot Locker's lagging stock price this year (down slightly) is a sign of what's to come in a world shifting to digital shopping.
"Foot Locker is losing traction in the emerging direct-to-consumer world," Greenberger says. "With Nike products representing 67% of Foot Locker merchandise, investors assume if Nike returns to growth, so must Foot Locker. We're not convinced. Our detailed Nike/Foot Locker overlap analysis reveals that 46% of Nike.com SKUs [stock keeping units] aren't available on FootLocker.com. Plus, Foot Locker's top 10% of customers represent a high percentage of its sales and our AlphaWise survey shows 34% of 15- to 24-year-olds (Foot Locker's core customers) prefer to shop through brands' stores or online." Cautions Greenberger, "If these core customers increasingly shop directly with Nike, Foot Locker could experience outsized sales declines. Our 2018 and 2019 earnings per share estimates are 4% and 7% below consensus."
It feels like yesterday when I talked to then new Clorox (CLX) - Get Report CEO Benno Dorer in late 2014 when he took over. Going on four years into his leadership of the bleach turned nutritional supplements-maker, Dorer has proven himself to be a world class operator. Real fun to watch someone grow into the position and change the game. I caught up with Dorer Thursday night after a surprisingly strong earnings report and outlook. The keyword is surprising: Earnings from the packaged goods industry have been terrible, look no further than Proctor & Gamble (PG) - Get Report .
Yet, Dorer rose above amid ongoing product innovation and believe it or not, pricing power in an ultra competitive business. "We have taken a courageous and aggressive stance on pricing. We are taking price increases on half of our product portfolio this fiscal year. That comes on top of pricing on disinfecting wipes and about a third of our professional products this past fiscal year. Both have been successful," Dorer told me.
Look for Dorer to do another deal within the next 12-months (he has bought two nutritional supplements businesses), likely in cosmetics.
Staying with the nostalgic theme, August 3, 2018 is the 11-year anniversary of Cramer's now legendary "They Know Nothing" live TV lashing of the Fed. As a young stock analyst on Wall Street at the time watching stocks being blown up instantly during a financial meltdown (and regulators dragging their feet), I can say Cramer's call perfectly captured the moment. It was a moment of fear. It was a moment of wondering whether you would have a job the next morning. It was a moment of concern that your parents house of 30 years would be taken away overnight. It was that intense, and Cramer captured the essence of it all in just a few minutes.