In Apple’s case it all seems to come down to market sentiment on competition and innovation. There has been a lot of yammering about what Apple should do with its cash hoard, but all investors really want is that next i-something that everybody has to have. You don’t hear about the Apple ecosystem constantly anymore (although that was getting boring), nor its still amazing record as a superior retailer.
Google Inc (NASDAQ:GOOG) is a formidable competitor and has been outperforming Apple up 23.85% over 52 weeks just slightly more than Smucker. But Google has no yield and a P/E of 24.65. Google has been pulling back from its high of $844.00 on March 6 and the short interest has been growing.
Analysts see Google growing more than these consumer staples at 14.18%, but not as much as Apple. Google is reporting on April 18 and a miss or in line report would send it down and Apple up. That is what may likely happen. Then Apple reports Q2 results on April 23 and this widely anticipated report will likely disappoint as there’s been no happening new product launch or news from China and EPS is anticipated to be slightly over $10.00.
What to do after earnings
That’s when it might be time to start nibbling on Apple and holding through the end of the year. According to the IRS over three quarters of Americans will get tax refunds averaging $2800 and of the 22% will spend it. Electronics will be the purchase of choice for 44% of them.
After the tax refund spend comes back to school, dads and grads, and finally the holiday giftapalooza. By that time, there should be definitive news about Apple’s plans for its cash and some defining new product.
Even Apple permabull Gene Munster of Piper Jaffray is taking the pause that refreshes on Apple suggesting it will trade sideways for several quarters. UBS analyst Steven Milunovich added Apple to their Most Preferred List citing likely catalysts for upside as a lower cost iPhone, raising the dividend, and finally carriage on China Mobile. Until then the company is taking heartening measures like switching away from rival Samsung on supply chain components.
Oversold vs overbought: the Foolish takeaway
Hershey, Smucker, and most other consumer staples seem to be overbought in anticipation of the usual summer sell-off and worries over Europe (again). Meanwhile, Apple is stuck in a range between its 52 week low of $417.00 and $460.00. Apple is a better value just on the numbers even if the torrid growth is slowing. Apple is the name with more upside, but it may take a few quarters for sentiment to catch up.
The article Trade Out Of Consumer Staples for More Upside With Tech originally appeared on Fool.com and is written by AnnaLisa Kraft.
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