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Business, Finance, Occupation & Industry

Dear Rock: Paper Beats Apple, Too

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By Eric Bleeker, CFA, The Motley Fool

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In the past three months, Apple  is down more than 20%, while International Paper  is up more than 20%, creating almost a perfect-pairs trade. Even if you extend the picture out since the start of 2012, Apple’s underpformance only widens; International Paper has returned more than 55%, while Apple is up less than 10%. 

The key idea here is that it could be surprising to many investors to see Apple, the leading mobile disruptor, underperforming an industry like paper. The Office was created with a paper sales office instead of one with hot-shot product designers for a reason. 

Yet in the following video, the Fool’s Eric Bleeker says there are plenty of lessons to be drawn from Apple and International Paper. First, he notes that International Paper‘s earnings were off a good amount in 2012, while Apple sees investors fretting about growth after it turned in 27% earnings growth. That’s an illustration that in the short run, companies are driven by perception more than by anything else. Apple is declining right now because investors are paying an increasingly smaller P/E for the company. Likewise for International Paper: Investors are taking a brighter view of the future and paying a higher P/E in spite of last year’s earnings decline. 

Why are investors excited about International Paper? Because of its focus on corrugated paper, which presents emerging-market opportunities and management’s focus on returning capital to shareholders. 

What are the two areas investors are focusing most on with Apple right now? The ability to capture emerging-market growth, and what it’ll do with all its cash. Eric says that while most Apple investors aren’t seeking out the next great opportunity in paper, there’s a lot to be learned from International Paper. Most of all, if Apple can make the right moves in the next year on those two areas, how quickly could its share price rebound?

To see Eric’s full thoughts, watch the video.

After its recent sell-off, is there reason to sell Apple, or is this an opportunity to be greedy and buy more when others are fearful? The Motley Fool’s new research report on the company gives you the right information so you can make a decision whether Apple has a place in your portfolio. Best of all, it comes with continuing updates and exclusive reports. To get started, just click here now.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Here's Why Shares of Universal Display Rose Today

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By Steve Symington, The Motley Fool

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Even as the wider market pulled back, shares of OLED specialist Universal Display  rose more than 7% during Friday’s trading, though they gave up some of those gains as the day went on.

So why the optimism?
As fellow Fool Eric Bleeker noted on Wednesday, Samsung was all set to release its latest flagship smartphone, the Galaxy S4, yesterday evening. Given Samsung‘s incorporation of OLED tech in its past Galaxy phones — and considering the fact the Korean conglomerate is currently responsible for the vast majority of Universal Display‘s total sales — anxious investors have remained on the edges of their seats to confirm to what extent (if at all) the Galaxy S4 would utilize Universal’s OLED materials in its screens.

The Galaxy S4 will go on sale next month and boasts a massive 5-inch AMOLED screen — up from 4.8 inches in the Galaxy S III — with an impressive pixel density at 441 pixels per inch. As a basis for comparison, note Apple‘s iPhone 5 has a pixel density of just 326 pixels per inch.

Of course, that doesn’t necessarily mean Apple fans will be swayed, especially when we remember CEO Tim Cook’s recent assertion that OLED screens’ color saturation is “awful,” while at the same time noting Apple’s own retina displays are nearly twice as bright. Even so, those comments seemed especially interesting after I noticed that, just a few days earlier, Apple may have quietly hired an OLED expert away from Korean electronics giant LG Display , fueling further speculation of Cupertino’s interest in the versatile technology.

In addition, just this morning analyst Brian Lee of Goldman Sachs added fuel to the fire by suggesting that, based on his channel checks, Universal Display remains “well positioned to benefit from [Samsung’s] upcoming Galaxy S4 ramp given its leverage to both red and green phosphorescent (e.g. emitter and host) materials” in the design of its display.

What’s more, Lee estimated Universal Display could end up collecting between three and four times as much revenue from each Galaxy S4 device as it did from every S III smartphone, “given its expansion in materials supplied from one to three types.” 

Of course, Lee’s perspective should come as little surprise considering the fact he has long remained a proponent for Universal Display‘s business and currently holds a $41 price target for its shares.

The bear case
On the other end of the analyst spectrum, let’s not forget Piper Jaffray analyst Jagadish Iyer who, just a few weeks ago, lowered his firm’s price target for shares of Universal Display from $18 to $16 after voicing concern that Samsung may also be using green host materials from Japanese OLED supplier Nippon Steel.

While Iyer’s comments helped shares of Universal Display fall by as much as 13% that day, his concerns appeared to be considerably overblown after the company skyrocketed 16% just a few days later following its solid fourth-quarter earnings results.

Now tell me how you really feel
While Samsung currently remains …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

My Top 2 Stocks: Apple and Berkshire Hathaway

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By Justin Loiseau, The Motley Fool

^SPX Chart

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Stocks are like underwear: The flashy ones get all the visibility, but can cause a whole bunch of trouble. Today, I’m letting readers in on my trustiest pair of stocks, my two top cash holdings that help me sleep at night. I’ll outline my bullish thesis and let you know whether I think there’s a stock sale for you today.

Long on Buffett
When investors decide to put their money behind Berkshire Hathaway , their investing thesis often consists of two words: Warren Buffett. Who can blame them? It’s hardly an original move to let one of the wealthiest men on earth manage your money, but creativity points don’t make money.

My investing thesis begins with Warren Buffett, but it doesn’t stop there. The Oracle of Omaha hasn’t kept his good habits to himself, and Berkshire Hathaway has continually proven that it’s more than its head honcho. Buffett’s assembled a powerful team of level-headed, long-term managers, and the company’s fundamentals continue to propel its financials.

Its sales have increased 50% in the past five years, while diluted EPS has shot up over 175%. Berkshire’s book value lagged the S&P 500 with a 14% increase for 2012, but the company’s market-beating 31% stock return should keep investors smiling.

Source: ^SPX data by YCharts.

Warren Buffett has the Midas touch, and he’s got his finger on the pulse of three major industries that mainstream investors have shunned: solar, wind, and rail.

Its 579 MW solar farm purchase from SunPower and partnerships with First Solar and General Electric further affirm that Berkshire has key allies in its quest to turn America green. As an aspiring environmentalist, I can feel good that Buffett has chosen clean and increasingly efficient companies to lead his shareholders into the future.

The company’s recent Heinz investment is the icing (or, rather, ketchup) on my cake: I’m now investing in something I personally know and love.

Apple’s profit pie
Apple is getting cored by Mr. Market, but its 40% dip hasn’t done much to sour my opinion of this stock. Recently, the world’s largest company by market cap, this corporation needs no introduction.

As fellow Fool Eric Bleeker points out, Apple’s 2013 trading frenzy is uncomfortably close to that of a penny stock. Institutional selling may have started the slide, but market rationality comes to those who wait. The company’s massive margins are envious, but its true staying power comes from solid management and $100 billion in cash.

Naysayers point to Samsung as the commoditizer of Apple’s iPhone and iPad, and they may be partially correct. But even if sales tighten, its suite of ever-growing products and services are what convince me of this company’s long-term value.

Apple’s brand packs a powerful punch, and I like what the tech company stands for. It’s faced down some serious supply chain issues and has emerged as an environmental leader in a …read more
Source: FULL ARTICLE at DailyFinance