Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Apple

Apple, Inc. is the well-known manufacturer of the “iPod,” “iPad,” “iPhone,” “iMac,” and “MacBook.” Founded in 1976, under the direction of CEO Steve Jobs, Apple was projected to be the first $1,000 stock before retreating from its record high of $705.00 in September 2012.

Former Wall Street Tech Favorite Set for a Comeback

By for Profit Confidential

How This Former Wall Street Tech Star Is Making a ComebackThe financial media and analysts are talking endlessly about the state and fragility of the stock market and whether a bottom may be near. I discussed the vulnerability to the downside in my last article. If you missed it, you may want to go back and read what I said. (See “Strategies to Protect Your Capital While Investing in This Market.”)

While stocks appear to be heading to negative ground in 2014, I view continued weakness as a buying opportunity to accumulate some stocks at a discount.

For the majority of you, I would advise staying away from the higher-beta small-cap and momentum stocks at this time and wait for things to settle down. In other words, I want to see some sustained buying support emerge to show some evidence the downside selling is coming to an end.

In the meantime, take a look at some of the bigger S&P 500 and DOW stocks that have moved lower to much more attractive entry points.

In the technology area, I like what’s happening at former Wall Street darling Microsoft Corporation (NASDAQ/MSFT) under the stewardship of CEO Satya Nadella.

While Nadella recently said some disparaging remarks on females in the workforce, what he has done at Microsoft since taking over from former CEO Steve Ballmer has been encouraging.

The rise in the stock price in Microsoft has even allowed Ballmer to pay an obscene $2.0-billon-plus for the LA Clippers. Ballmer’s failure to recognize and fully understand the big impact the mobile sector has on the technology space helped to make Microsoft insignificant for years.

MSFT Microsoft Corp Chart

Chart courtesy of www.StockCharts.com

Nadella has shifted his … Read More

Why I’m More Excited About the Food Sector Than Apple’s Latest Products

By for Profit Confidential

This Food Company More Deserving of Your Attention Than AppleWhile the entire world was waiting for and anticipating the next-generation “iPhone 6” from Apple Inc. (NASDAQ/AAPL) on Tuesday, General Mills, Inc. (NYSE/GIS) announced it was acquiring organic and natural food company Annies, Inc. (NYSE/BNNY).

Okay, the launch of the iPhone 6 was clearly more exciting, but so what? The launch was more hype than substance, unless you consider a new and bigger iPhone earth-shattering.

But I’m not here to talk about Apple. What I will discuss is the food sector, especially the makers of organic and natural food products, which appear to be in play, based on my stock analysis.

If you owned Annie’s before it was acquired by General Mills, congratulations on your 38% jump in stock price on the news! Go treat yourself to some fine wine and a great meal. If you didn’t get to profit from this deal, there are still some stocks in the same sector as Annie’s that have great potential.

One small-cap natural food products company that I like based on my stock analysis, and this is one that I have been covering for a few years now, is Inventure Foods, Inc. (NASDAQ/SNAK). The small company produces and markets specialty food brands, concentrating on the snack food market. Some of its product lines include nutritional and natural snacks.

Inventure Foods sells products under its own brand and other licensed brands, including the following: “Boulder Canyon Natural Foods,” “Jamba,” “Seattle’s Best Coffee,” “Rader Farms,” “T.G.I. Friday’s,” “Nathan’s Famous,” “Vidalia Brands,” “Poore Brothers,” “Tato Skins,” “Willamette Valley Fruit Company,” “Fresh Frozen,” and “Bob’s Texas Style.” The company’s manufacturing plants are located in Arizona, Indiana, … Read More

Top Opportunity in Mobile Market Lies in China

By for Profit Confidential

China Mobile Leading the Mobile Growth PackThe Chinese economy is showing signs of stalling, but there are numerous areas that continue to show decent growth metrics, including automobiles and mobile phones.

Now, if you think AT&T Inc. (NYSE/T) or Verizon Communications Inc. (NYSE/VZ) are big, take a look at China Mobile Limited (NYSE/CHL). China Mobile is the largest mobile phone operator in China, with about 790 million subscribers as of June 30—that’s more than the entire population of Europe! The company’s growth is even expected to expand as 3G and 4G networks grow in popularity.

You cannot ignore the fact that China is the top mobile market in the world with more than one billion users. Plus, you not only have the urban dwellers using these services, but we are seeing massive demand in the rural areas as well, especially when rural workers migrate to the cities, looking for jobs.

And with the mobile sector in the country being heavily regulated by the Chinese government as far as licenses and the landscape, there are currently only three major mobile operators in the country.

What’s most intriguing is the development of advanced mobile technologies. China Mobile only introduced its 4G network six months ago and already it has coverage in 300 cities and approximately 6.5 million users.

China is a key global growth market for Apple Inc. (NASDAQ/AAPL), too, which is searching for growth in the emerging markets. Apple’s deal with China Mobile will definitely help.

China Mobile is regarded as the top brand in BusinessWeek’s “20 Best China Brands.” The stock pays an annual dividend of $1.88, for a current dividend yield of 3.8% based … Read More

Microsoft’s Deal with Apple a Lucrative Move?

By for Profit Confidential

Microsoft Impressing Investors with New FocusThe business climate appears to be changing at Microsoft Corporation (NASDAQ/MSFT), as the company attempts to evolve from its roots as a maker of operating systems for personal computers (PCs) to a more dynamic business focused on the surging mobile sector.

It has been a long time coming for this former Wall Street star. Out with former Microsoft CEO Steve Ballmer and his lack of vision and execution in acknowledging the significance of the mobile sector. The new leader at the helm, Satya Nadella, appears to be steering Microsoft out of troubled waters and into the new realm of mobile.

The stock is at a new 52-week high and looking higher on the charts—finally rewarding shareholders and institutional investors after years of miscalculations.

Instead of focusing on the “Windows” operating system and PCs, Microsoft has shifted its focus to smartphones, tablets, entertainment gaming consoles, and now, it’s creating applications that could be used on the Apple Inc. (NADSAQ/AAPL) “iPad.”

Microsoft announced it would be offering as a downloadable app from the Apple App Store its widely used “Office” suite, which includes the popular “Word,” “Excel,” and “PowerPoint” applications. This strategy is a sharp contrast to the past years, when Microsoft was battling Apple to sell smartphones and tablets. Now having recognized the fact that Apple is tops, Microsoft is looking to build apps for the iPads and harness the hundreds of millions of users.

A smart move by Nadella and based on the share price, the stock market is pleased with the new direction.

Of course, Apple also benefits, as the company will receive 30% of the fees paid for … Read More

What the “Microsoft Indicator” Says Now

By for Profit Confidential

Microsoft the Best Market Indicator at This TimeEarnings estimates for Microsoft Corporation (MSFT) are going up and the stock, which recently accelerated, finally looks like it has broken out of a 13-year consolidation.

Microsoft has been an income play for quite a while. Currently yielding three percent, the company’s forward price-to-earnings ratio is around 12.5 and is not dissimilar from many other blue chips.

Then there’s Intel Corporation (INTC). This company has been struggling for capital gains, but it’s yielding 3.6% and isn’t expensively priced.

What these technology companies illustrate so well is the business cycle, both in terms of operational growth and also as equity securities. Getting the cycle correct (the right place/stock at the right time) is the toughest thing for any investor or businessperson.

Regarding stocks, both Microsoft and Intel’s long-term charts clearly show how extremely overpriced their share prices were during the bull market of the 90s. Intel’s long-term stock chart is featured below:

INTC Intel Corp. Nasdaq GS Chart

Chart courtesy of www.StockCharts.com

The benefit of the very long term is that it provides a normalized but still decent rate of return with these kinds of stocks. No enterprise or investor can escape the business cycle, whether it is industry-specific, a local reality, or the general economy.

Railroad stocks have been super hot over the last several years, but for long periods of time, they were not. The solid dividend-payers that they are, you’d be hard-pressed to find Union Pacific Corporation (UNP) competing with Apple Inc. (AAPL) or Google Inc. (GOOG) for headlines.

I feel that stocks have broken out of their previous consolidation phase in favor of a new long-term cycle. But while last year’s stunning price … Read More

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