The market, in our view, remains basically bullish as the economy continues to improve and corporate earnings continue to grow — especially at our kind of sector-leading growth companies. We see stocks continuing to rise through 2013 and well into 2014.
In the technology sector, it's time to take a serious look at Apple (AAPL); we also recommend Microsoft (MSFT) and Equinix (EQIX). (Editor's note: Congratulations to Stephen on the 28th anniversary of his US Investment Report.)
For Apple, the $700 peak of last fall was doubtless over-inflated. And while Samsung has given Apple stiff smart phone competition, AAPL is selling iPhones and iPads by the jillions.
And it just unveiled a massive stock buyback program that will return $100 billion of cash to shareholders by 2015. Apple remains a vibrant company growing earnings at 15% a year and trading at 7 times forward earnings. As we write, its price is $405, and we can see a move to $500.
Microsoft has sprung to life this spring in the 29 to 30 zone, as bulls look beyond June fiscal 2013's flattish earnings of $2.70-2.75 per share and anticipate gains to $3.10-3.25 in fiscal 2014 and $3.35-3.60 in fiscal 2015. The forward P/E is 10.
Meanwhile, Equinix is particularly intriguing. When we discovered it in 2010, Equinix was busy creating, at great up-front expense, a global platform of data centers that today has attracted over 4,000 user companies.
The stock rose from below $90 to over $220 this February, a three year gain of 143%. Since then EQIX has been treading water at 210-215, even as revenues and earnings keep growing — stalled largely by concern over its 40-plus P/E ratio.
With consensus earnings estimates slated to rise from $3.62 to $4.78 per share this year and to $8.09 in 2014, we have upped our 6- to 12- month price target from $240 to $250.
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