Subscribe to The Free Market Chronicle and join the 2,715 subscribers getting it for FREE!
[widget id=”wordads_sidebar_widget-41″]
What The Apple Suppliers and Verizon Are Saying About Apple’s Stock
[widget id=”text-16″]
I’m so confused by the Apple iPhone back and forth now that I can’t figure out what who is right and who is wrong. Are iPhone sales strong, is Apple’s guidance for next quarter at risk? It seems like every day one analyst is defendingย Apple while another is raising concerns.ย Today’s was JP Morgan’s turn, cutting forecast for the Apple suppliers.ย The most significant problem here is that market is beginning to tell us that all is not so well for the iPhone, based on the stocks of the suppliers, and Verizon’s recent comments, and that is starting to make me concerned.
[widget id=”text-19″]
Verizon
Apple’s stock has been relatively flat in 2018, but such is not the case if you are a supplier. Even Verizon recently noted on their conference call, they see and elongation of theย upgradeย cycle with customers not upgrading to new phones as quickly, as in the past. Admittedly, that is not a good sign for the iPhone.
[widget id=”text-12″]
Supplier Struggle
Then looking at the supplier stocks and they just continue to behave terribly. Skyworks, Qorvo, Jabil, Cirrus Logic, Broadcom, have been crushed since mid-November. Unfortunately, we can’t use Qualcomm and NXP in this assessment given the buyout scenario for each.
The chart below shows how each stock of the suppliers is down by over 8 percent, while Apple shares are flat, and the S&P is up by nearly 9 percent.
So if we remove our emotions, and gut feelings it seems pretty clear from looking at stock performance, and the recent Verizon conference call notes that all is not going well for Apple and the newest iPhone launch and that perhaps this cycle may notย be what everyone had expected.
Cheap Multiples
All of these suppliers also trade with one-year forward PE ratios of 12.5 or below, which appear cheap, but of course, that is if companies do not start talking down those expectations, then suddenly we can see those PE’s begin to rise, as estimatesย come down.
SWKS PE Ratio (Forward 1y) data by YCharts
The one thing I have learned over the years is that the market speaks, and stock price movementsย speak louder than any research notes,ย and when stocks are cheap based on a multiple or against a peer, there is a reason for it.
We will find out next week if the market was right or wrong. But for now, the market is speaking loud and clear. The newest iPhone will not be the runaway hit everyone expected it to be and that could be a problem for Apple’s stock.
[widget id=”text-13″]
Mott Capital’s Reading The Markets –ย An In-depth Global Macro Stock Market Commentaryย –ย In Video Format – See How Michael Dissects The Markets
Just $200 Per Year – Get Your Free Trial
Recent Videos:
Why It May Be Time To Get Bullish On Materials As Dollar Plunges
What Everyone Seems To Get Wrong On Netflix
The Long Straddle, Plus Biotech Breakout
Inflation, Tesla Plus So Much More
Free Articles Written By Mike:
Why Netflix Is Still Cheap Despite 30% Gain In Three Weeks
How Netflix Will Spark The Next Media M&A Wave
Biotech M&A Spree Could Push Sector to New Record Highs
Why Apple’s Suppliers Are Plunging As Mega Tech Thrives
Why Chipmaker Lam Research Is Poised For a Rebound
How a Juno Takeover Could Boost Celgene
Why Ford Could Rise By Nearly 30%
Apple Poised to Gain 14%, Defying Skeptics
Exxon Mobil May Rise 20% on the Back of Surging Oil
We offer daily market commentaries sent directly to your inbox or follow us on Twitter.
Join our 2,715 Daily Subscribers And Get This Commentary In Your E-Mail! Subscribe
-OR-
[vc_tweetmeme type=”follow” follow_user=”michaelmottcm” show_followers_count=”true” large_button=”true”]
Michael Kramer and the clients of Mott Capital own shares of VZ, SWKS and NXPI
Mott Capital Management, LLCย is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.ย Upon request, the advisor will provide a list of all recommendations made during the past twelve months. Past performance is not indicative of future.
ยฉ 2017 Mott Capital Management, LLC.ย Use, publication or reproduction in any media prohibited without the permission of the copyright holder.
Tags: #apple #suppliers #iphone #verizon