Joseph Gomez, Sr. Investment Advisor

Companies are clearly having a tougher time living up to analyst expectations this season. Currently, only 58 percent of companies have managed to beat estimates. Even though we are in the middle of earnings season, analysts have continued to lower their earnings estimates at a quickening pace. There is a factor of seasonality at play here too. Over the last 100 years, February has not been particularly profitable in the stock market.

For longer-term investors, Gold has finally broken above a downtrend that has been in place since last September.

Banks and financial firms have taken the lead in January. On one hand this makes sense since it was the worst performing sector in 2011. On the other hand, a flattening yield curve is not the ideal operating environment for banks. Technology earnings have been a mixed bag. On the downside, Google was a disappointment while Apple absolutely crushed expectations. The subdued reaction of Apple’s shares following earnings is due to the Law of Large Numbers. Any other company’s shares would have popped 20%, instead Apples’s shares only rose about 5%. Currently, Apple has over $97 Billion in cash. That is greater than the entire market capitalization of 470 companies in the S & P 500 Index. Apple’s quarterly profits were $13 Billion vs. $3 Billion for Walmart.

Surprisingly, one mega cap that has been in a stealth rally this year is Microsoft (MSFT). Their XBOX and Office business groups are doing well, but the PC market has become a drag.

Important Earnings released in January

 

Ticker Company Sector Industry Yield % Gain/Loss Price
AAPL Apple Inc. Technology Personal Computers 10.44% 447.28
XOM Exxon Mobil Corporation Basic Materials Major Integrated Oil & Gas 2.19% 1.26% 85.83
MSFT Microsoft Corporation Technology Application Software 2.74% 12.60% 29.23
IBM International Business Machines Corp. Technology Diversified Computer Systems 1.58% 3.58% 190.46
CVX Chevron Corporation Basic Materials Major Integrated Oil & Gas 3.12% -2.29% 103.96
GE General Electric Company Industrial Good Diversified Machinery 3.57% 6.25% 19.03
GOOG Google Inc. Technology Internet Information Providers -10.21% 579.98
JNJ Johnson & Johnson Healthcare Drug Manufacturers – Major 3.48% -0.03% 65.56
PG Procter & Gamble Co. Consumer Good Personal Products 3.27% -2.84% 64.3
T AT&T, Inc. Technology Telecom Services – Domestic 6.04% -2.15% 29.16
PFE Pfizer Inc. Healthcare Drug Manufacturers – Major 4.10% -0.74% 21.48
WFC Wells Fargo & Company Financial Money Center Banks 1.62% 7.40% 29.6
JPM JPMorgan Chase & Co. Financial Money Center Banks 2.69% 12.72% 37.21
INTC Intel Corporation Technology Semiconductor – Broad Line 3.14% 10.23% 26.73
VZ Verizon Communications Inc. Technology Telecom Services – Domestic 5.37% -6.04% 37.21
SLB Schlumberger Limited Basic Materials Oil & Gas Equipment & Services 1.43% 12.22% 76.66
MCD McDonald’s Corp. Services Restaurants 2.84% -1.63% 98.69
COP ConocoPhillips Basic Materials Major Integrated Oil & Gas 3.80% -4.76% 69.4
C Citigroup, Inc. Financial Money Center Banks 0.13% 17.33% 30.87

Next week, we have earnings from Exxon, Amazon, Bidu, Mastercard and Yum Brands.

Have a pleasant and productive week.

 

Clients, principals and/or employees of Alhambra Investment Partners may have long or short positions of any above-mentioned securities.