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.
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