Bullish on Fitbit Inc (FIT)

Wall Street analysts have been trying to assure FitBit investors that the Apple Watch is not a threat as the company is growing at an extremely fast rate. Additionally, Fitbit prices range from $60 to $250, compared to the Apple Watch that starts at $350.

Pacific Crest analyst Brad Erickson weighed in on FitBit on September 15, initiating an Overweight rating on the stock with a $47 price target. The analyst believes investors should not be concerned about the Apple Watch taking away market share from FitBit as “the business is growing ridiculously fast.” He noted, “Apple’s current presence in fitness watches doesn’t represent a risk to Fitbit, in our view, and in the absence of a product launch from Apple, we think Fitbit’s growth can exceed expectations, with competitive concerns likely proving overdone at current levels.”

R.W. Baird analyst William Power also weighed in on Fitbit on September 15 following a meeting with Fitbit management last week, reiterating an Outperform rating on the stock with a $54 price target. The analyst acknowledged the company’s focus on “more user engagement over time.” He noted, “the company believes that new features, like heart rate monitoring, should continue to improve engagement. As the base grows, improving engagement to help drive upgrades will become more important.”

Analysts who have rated Fitbit within the past three months; 10-bullish, 5-neutral. The average 12-month price target on Fitbit is $53.69, marking a 62.5% potential upside from current levels.

Foster, 16-Sept

Fitbit - RBC Report

A new report from RBC cites the strong growth potential This company had one of the hottest initial public offerings of this year, and the quiet period just ended and Wall Street analysts are very bullish. Fitbit Inc. (FIT) is leading a worldwide movement toward healthier, more active lives by empowering people with data, inspiration and guidance to reach their goals. The Fitbit platform combines connected health and fitness devices with software and services, including an online dashboard and mobile apps, data analytics, motivational and social tools, personalized insights and virtual coaching through customized fitness plans and interactive workouts. The platform helps people become more active, exercise more, sleep better, eat smarter and manage their weight. Fitbit appeals to a large, mainstream health and fitness market by addressing these key needs with advanced technology embedded in simple-to-use products and services. The company has already sold over 20.8 million devices since inception. The RBC analysts are very positive on the stock. They think the connected health/fitness market is in the early growth stages, and the company is rapidly gaining share. The RBC team sees increasing unit and average-selling-price growth with a platform approach. They also believe that a deeper international push, combined with corporate wellness adoption, should help grow revenues an estimated 83% this year and conservatively almost 30% next year. The RBC price target of $55 is well above the consensus target of $42.25. Note that the stock closed above the consensus level Monday at $43.48. 24/7 Article

Preferred Picks

Depending on your views of the market and broader economy as a whole, you might be considering non-equity options right now. I maintain a ‘screener’ of about 40 preferred shares that I keep an eye on. Here is a quick update on a few of my current picks.

Wells Fargo Preferred ‘P’ (WFC-P) has 5.25% coupon rate, issued at $25 a share. It is currently trading for about an 8.4% discount at $22.90 a share, which gives it an effective return of 5.73%. Wells Fargo currently carries a BBB+ rating from S&P’s.

JPMorgan Chase Preferred ‘D’ (JPM-D) has a 5.50% coupon rate, issued at $25 a share. It is currently trading for about an 8.3% discount at $22.92 a share, which gives it an effective return of 6.00%. JPMorgan carries a BBB rating from S&P’s.

Barclays Bank Preferred ‘C’ (BCS-C) has a 7.75% coupon rate, issued at $25 a share. It is currently trading at about a 3% premium at $25.74 a share, which gives it an effective return of 7.53%. There are very few preferred with a yield this high, at such a small premium. Barclays is only carrying a BB rating. S&P defines the BB rating as below:

‘BB’—Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.

Offshore drilling industry takes a punch

Seadrill Ltd (SDRL) which I had recommended and added to in March of this year, is down about 11% since my additional purchase and post. The stock is down over 26% year to date, not counting the three rather large dividend payments (~9%). Things are worse over at Transocean Ltd (RIG), where they are down over 29% year to date. The picture is no prettier over at Ensco (ESV) down 21.5%, Rowan (RDC) down 24%, Diamond Offshore (DO) down a whopping 33% year to date. The industry as a whole is taking a pretty big hit.

Backlog, or lack of backlog in the current market, is often used as the gauge of future earnings in the offshore rig market. Currently the market is lacking that line of oil and gas companies looking to lock up rigs on day rate for the coming years. This is a cyclical industry, and the stocks may have further to fall before it picks back up.

I still think Seadrill (SDRL) is a hold, and it might be a decent buy opportunity for those looking to make a contrarian play. That said, the market as a whole is very near its highs, and this sector is struggling to avoid 30% year to date decline… Proceed with caution.

Apple Rallying to 52-Week Highs

Should Apple Really Be Rallying to 52-Week Highs After Earnings?
By Jon C. Ogg July 23, 2014 11:00 am EDT

Apple Inc. (AAPL) feels like its stock is defying history and logic after earnings. The company’s third-quarter report was bland enough that it should have allowed traders and investors a chance to take profits. Yet the stock is rising and has quite amazingly and surprisingly hit new 52-week highs, so we wanted to take a look at what is driving the cart here.

For starters, the earnings report had at least some disappointments. iPad sales were soft, yet Tim Cook said he wasn’t concerned. By our take, international sales were weak as well, with sequential slowing in China, Japan and the rest of Asia being more than expected.

Now consider this. Since Apple’s last earnings report, the stock was already up 27% going into Tuesday’s earnings on a close-to-close basis. It looked as if Apple was priced for perfection and nothing short of that. The stock had peaked just above $97 last week, but even after the seven-for-one split there had hardly been any serious pullbacks. Usually you see some pullback going into or slightly after an effective split date formally enacts a split. Not so here.

One solid metric was that Apple’s margins continued to rise. This is even after Tim Cook was showing strong R&D spending, and Apple has also become an acquirer. The real focus here seems to be that investors are positioning themselves for a very strong iPhone 6 launch later this year. An order for 80 million units of the larger format phone was reported.

As far as all of those old analyst price target hikes, the consensus price target is almost $101, now that analysts have raised and raised their price targets. The latest news from analysts was that the new street-high price target is now $135 for Apple. This is a significant reversal of a company that was considered partly lost as recently as a few months ago.

One driving force is that Apple shares appear to have been under-owned by institutions. Whether or not that remains the case, it seems hard to believe, but Apple’s share performance after earnings was impressive. A gain of nearly 3% to $97.45 (a new 52-week high to boot) in mid-morning trading on Wednesday should speak for itself when many Apple watchers might have expected the stock to see profit taking.

Stay tuned.

http://247wallst.com/technology-3/2014/07/23/should-apple-really-be-rallying-to-52-week-highs-after-earnings/#ixzz38Ju9KuiH

Apple & IBM Partnership

Apple Inc. (AAPL) announced Tuesday of this week that it had signed a global “enterprise mobility” deal with International Business Machines Corp. (IBM). Under the deal, IBM employees will recommend Apple's smartphones and tablets to enterprise customers. The two companies will develop apps geared towards enterprise clients across various industries. IBM stands to get a big boost by selling its software and services to businesses seeking to manage their employees’ Apple devices (either BYOD's or devices to be sold by IBM).

From an Apple standpoint, the move was greeted with some ho-hum attitude by many analysts, who cited the already high market saturation Apple's iOS devices have in the US.

Piper Jaffray analyst Gene Munster led the chorus of shrugs at news of the pact:
"In terms of the benefit to Apple, we do not expect the partnership to have a measurable impact on the model given that Apple has already achieved 98% iOS penetration with Fortune 500 companies and 92% penetration with Global 500 companies,"

However, the fact remains that iOS is on less than half of enterprise devices in some markets, and in iOS's best market Android still commands one of every five mobile business devices.

Jim Edwards, from Business Insider noted:

Once you sell a company on a new device, that company is probably locked in as a customer for years to come, through several device upgrade cycles and all sorts of software add-ons.

If you've ever worked for a company that has forced you to use the worst devices and software you've ever seen, and wondered why that's the case, this is the answer. It's not that your IT department is incompetent. It's that it is genuinely difficult to move thousands of employees off one computing platform and onto another.

Where Apple may stand to gain from this partnership is through IBM's already existing enterprise customer base. Undoubtedly some of those customers will not be using iOS devices yet, and IBM may be able to make headway in getting those customers onto iOS devices. The benefit to Apple being that IBM will handle this with their own global sales force, while Apple sits back and sells the devices.

Will this make a notable difference to the top or bottom line at Apple?

Once again, Piper Jaffray analyst Gene Munster had the following to say:
[It] is unlikely to be the make or break factor for a large corporation in utilizing iOS. We note that if half of the Fortune 500 were to each purchase an incremental 2,000 iPhones and 1,000 iPads above what they were planning to purchase as a result of the IBM deal, it would mean about a half a percent to CY15 revenue.

Is GoPro the Apple of action sports?

Yesterday GoPro (GPRO) started trading on the NASDAQ. The stock shot up more than 30 percent (from the IPO price) in their market debut Thursday, following an initial public offering that valued the sports camera maker at about $3 billion.

Like all ‘regular investors’, the IPO price ($24/share) was not something I was able to obtain. I was able to get shares at $29.50 shortly after it started trading freely on the NASDAQ.

I bought GoPro because I kept coming back to one thing “they might be the Apple (AAPL) of sports cameras” or whatever you might call that niche. I myself own a GoPro, but am somewhat embarrassed to admit it has not been used. At about $300 a piece they are not cheap, but also very affordable for what they are. Reminds me a bit of Apple iPhones, not cheap, but a decent price for what they are. GoPro sells a ton of accessories; mounts, waterproof cases, harnesses, floats, etc… Apple sells a ton of accessories…

Ok, antidotal at best so far, right?

Why do people like myself, and many of my friends go and get a GoPro? Hell, I have not even used mine yet.
The GoPro captures the same “it factor” that Apple captured, first with the iPod, then with the iPhone. Apple has milked that “it factor” for the past 2 to 3 years while the iPhone has been the inferior product on the market. It is only now that people are starting to consider leaving the iPhone for more powerful, larger, faster, generally “better” phones… Bring this back around to GoPro…

I think GoPro can milk this “it factor” for a while to come. They are the #1 action sports camera by miles, most people can’t even name a competitor product. Sure Sony, and others have products out there, but can you name them? I think GoPro can ride out a single product line, with accessories, for another few years without having to branch out too far from their core area.

As of the writing of this post the stock has opened up the first hour of trading +22% at $38.55