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Thursday, July 19, 2012

thoughts... GOOG and AAPL

GOOG - Solid quarter, and the combined numbers between MMI and GOOG proved the company was ready. (As highlighted numerous times.) I liked that CPC was flat. I liked Patrick Pichette's attempt to contain himself when asked about Motorola. (I wish they gave a detail plan, but we know the culture of this company. And if anyone thinks Google is just going to dick around with a such an opportunity, as they have already developed their own 'Nexus' brand, pass me what your smoking.)  I really like Google's transition into the post-PC world.

Most importantly, today wall street received confirmation that Google does not deserve to trade with a recessionary-low multiple.  From a technical perspective, there are a few resistance areas Google has to get through.

When the stock opens tomorrow, it will test the 610 resistance. Prudence dictates to capture profits, then re-enter on a push back from the resistance.

But fundamentally, I really do not want to.  Google should be making new highs by the end of the year. (And that is on a consolidated multiple, of 19, assumption.)

AAPL - I do not know what to think about Apple this quarter. The dilemma is that everyone already knows AAPL will kick ass. The stock did not react as harshly as QCOM or GOOG or other big tech names.  The market has already told investors, for a company as large as Apple, a multiple of around 16 is the new high end. AAPL is currently trading with a multiple of 15. Action maybe muted.

Blogger estimates are north of 11. Analyst estimates are near 10.40.  If the market allows AAPL to have a trailing multiple of 14.5, both estimates will allow AAPL to trade between 630-640. But if AAPL does not do the whisper numbers (which are the blogger/amateur analysts), the stock will probably take a hit.

Regardless of what happens after earnings, AAPL will be a $700 by the end of the year. The iPhone 5 will be announced come August, and iPad sales are still kicking ass.

After earnings, I will be looking to play AAPL (in addition to a core position) when its trailing multiple is near 13-13.5. Regardless of how that happens (ie The stock falls or earnings fills into the stock and the street is late to react to the low valuation.)

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