By Tim Beyers, The Motley Fool
Filed under: Investing
Each week, I endeavor to report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I’ve done it before; my last tussle with Mr. Market ended with me beating the index’s average return by 13.35%.
Real money was on the line then as it is now, which means any one of the five stocks you see below could cause me a lot of public embarrassment. Apple has caused the most trouble over the past several months. Count this week’s 3.5 percentage-point drop as the latest dip.
Apple’s stock price has fallen more than 33% over the past 12 months and is down 20% year to date, despite an 8% rise in the S&P 500. Holding in hopes of seeing CEO Tim Cook and his team make good on long-promised innovations in delivering televised entertainment has cost me dearly.
Bullish investors will nevertheless tell you that Apple stock looks like a bargain at current prices. They’re right. Google and Microsoft both trade at a noticeable premium to Apple when you factor in liquid assets:
AAPL Price to Earnings Less Cash TTM data by YCharts.
Selling now would amount to declaring that the Mac maker is incapable of generating even 10% annual earnings growth for the foreseeable future. Analysts are modeling for 18.9% annual gains over the next five years, according to Yahoo! Finance.
A decade of investing has taught me that winning is less a matter of wits and more a matter of willpower. Apple is testing my will to hold, so I shall.
What’s the Big Idea this week?
Elsewhere, Google and Riverbed Technology barely budged as my other two tech holdings plunged, costing me another 420 basis points in my three-year battle with Mr. Market. Among the indexes, only the Dow reported a marginal 0.19% gain.
This time, the Russell 2000 led the laggards with a 2.72% decline, followed by the Nasdaq’s 1.30% drop, and the S&P 500’s 0.59% dip, according to data supplied by The Wall Street Journal. Here’s a closer look at where I stood through Thursday’s close:
|
Company |
Starting Price* |
Recent Price |
Total Return |
|
Apple |
$416.26** |
$427.72 |
2.8% |
|
|
$650.09 |
$795.07 |
22.3% |
|
Rackspace Hosting |
$41.65 |
$46.86 |
12.5% |
|
$25.95 |
$14.96 |
(42.4%) |
|
|
Salesforce.com |
$100.93 |
$166.41 |
64.9% |
|
AVERAGE RETURN |
— |
— |
12.02% |
|
S&P 500 SPDR |
$124.39** |
$155.86 |
25.29% |
|
DIFFERENCE |
— |
— |
(13.27%) |
Source: Yahoo! Finance.
*Tracking began at market close on Jan. 6, 2012.
**Adjusted for dividends and other returns of capital.
Notable newsmakers
Among the other tech stocks making news last week:
-
Facebook took its fight with Google to next level by introducing “Home,” an overlay for Android phones that assumes control of a handset’s home and lock screen. An accompanying “cover feed” reveals what friends are up to while making chat accessible from any app or screen.
-
Tesla Motors soared this week after the company said Model S sales came in at 4,750, above the 4,500 projected earlier. The company also forecast a surprise first-quarter profit. Tesla next reports earnings on May 6.
-
Finally, in yet another …read more
Source: FULL ARTICLE at DailyFinance