AAPL

Apple Beats Expectations, Remains a Free Cash Flow Cow

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Image: Apple’s shares have done quite well since the beginning of 2022. By Brian Nelson, CFA Apple (AAPL) reported calendar second quarter (fiscal third quarter) results on August 1 that beat the consensus estimate for both revenue and GAAP earnings per share. The iPhone maker put up June quarter records for both revenue and earnings per share while its Services revenue hit a new all-time high. Quarterly revenue was up 5% year-over-year, while quarterly earnings per diluted share came in at $1.40, up 11% on a year-over-year basis. Apple’s quarterly commentary was positive: During the quarter, we were excited to announce incredible updates to our software platforms at our Worldwide Developers Conference, including Apple Intelligence, a breakthrough personal intelligence system … Read more

Apple Raises Dividend; Launches $110 Billion More in Buybacks

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Image: Apple’s fiscal second quarter of 2024 didn’t disappoint. By Brian Nelson, CFA On May 2, Apple (AAPL) reported better-than-expected results for its second quarter of fiscal 2024. Both revenue of $90.8 billion and quarterly earnings per diluted share were modestly above consensus. These days, Apple has become very shareholder-friendly, with the firm upping its dividend payout and launching a massive incremental buyback program. Here’s what management had to say about the quarter: Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services. During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We’re also looking forward to an … Read more

3 Dividend Growth Stocks for the Long Run

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Image Source: Mike Mozart By Brian Nelson, CFA Stock prices and returns are in part a function of a company’s net cash position on the balance sheet and the free cash flows that it will generate in the future for shareholders. We call net cash and future expected free cash flow generation the two primary cash-based sources of intrinsic value in determining a company’s fair value estimate. When it comes to assessing dividend health, we examine these two cash-based sources of intrinsic value, too. For example, a company with a strong net cash balance has greater financial flexibility than a firm with a large and prohibitive net debt position. Entities that generate strong free cash flows in excess of their … Read more

3 Catalysts for Apple’s Stock

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Image: Apple’s shares have done quite well since the beginning of 2023. By Brian Nelson, CFA When Apple (AAPL) reported calendar fourth quarter results (its first quarter fiscal 2024 results), concerns over sales in China and the momentum behind its Services business cast a cloud over results. Sales from Greater China came in at $20.8 billion in the quarter, but this was much lower than the $23.5 billion that analysts had been expecting. The company’s Services business performed well, but it also came in a bit lower than expectations, despite segment revenue and its installed base of active devices hitting all-time highs. Revenue for its iPhone came in better than expectations in the quarter, so while there was some profit … Read more

Berkshire Hathaway Caps Off Strong Year of Operating Earnings Growth

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Image: Berkshire’s operating earnings experienced a strong advance during 2023 from last year’s levels. By Brian Nelson, CFA On February 24, Berkshire Hathaway (BRK) reported strong fourth-quarter results that capped off a year where operating earnings advanced 21% on a year-over-year basis. Warren Buffett tipped his hat to his long-time partner Charlie Munger, who passed away in November of last year, crediting him as the architect of Berkshire and himself merely in charge of the “construction crew.” There weren’t many surprises in the annual report, and Buffett made several references to areas that he has long talked about in the past, including pointing investors to operating earnings, as opposed to net income, which includes unrealized capital gains that can make … Read more

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?

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Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. By Brian Nelson, CFA We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key … Read more

Palantir’s Fourth-Quarter Results Showcase Strong Trends in Artificial Intelligence

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Image: Palantir’s revenue continues to march higher, and the company’s performance continues to showcase the growing strength in artificial intelligence. Source: Palantir By Brian Nelson, CFA Palantir Technologies (PLTR) has three core software platforms called Gotham, Foundry, and Apollo that “provide the critical infrastructure needed to integrate (its) customers’ data and operations and run their software in virtually any environment (Form 10-K).” On February 5, the firm reported solid fourth-quarter results that showed revenue growing 20% on a year-over-year basis and GAAP net income coming in at $93 million, representing the fifth consecutive quarter that the firm has driven positive GAAP profits. We liked Palantir’s quarterly results, but we wanted to bring to members’ attention the commentary surrounding artificial intelligence [AI]: … Read more

Big Cap Tech and Large Cap Growth Continue to Lead Market Higher

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Image Source: Marco Pakoeningrat By Brian Nelson, CFA We continue to like the areas of big cap tech and large cap growth as the top firms in these areas have strong cash-based sources of intrinsic value: net cash on the balance sheet and strong expected future free cash flow generation. After the close February 1, the market received the quarterly earnings reports from Meta Platforms (META), Amazon (AMZN), and Apple (AAPL), and we were pleased by the trio’s performance during the calendar fourth quarter. We maintain our long-held view that big cap tech and large cap growth will continue to lead the market higher, and we continue to overweight these areas in the newsletter portfolios. The biggest upside surprise was … Read more

In the News: MSFT, AAPL, SAVE, ALB

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Image: Microsoft and Apple have been strong performers the past several years, with Microsoft recently surpassing Apple’s market capitalization to become the largest entity in the S&P 500. By Brian Nelson, CFA The start of trading in 2024 hasn’t been tracking the way that we like, but it’s way too early to sound the alarm on any sort of correction. The employment markets remain very healthy, both as it relates to unemployment and wage gains, while inflation looks to be largely under control, with the market expecting a number of rate cuts during 2024. We continue to like the areas of big cap tech and large cap growth in the current market environment. Microsoft (MSFT) is now the largest company … Read more

In the News: Apple, Nvidia, ANSYS

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By Brian Nelson, CFA The first week of trading in the new year wasn’t very welcome, but we think it is far too early to draw any conclusions about how the rest of the year will be. The Dow Jones Industrial Average (DIA), S&P 500 (SPY), and NASDAQ (QQQ) faced selling pressure in the first week due in part to investors waiting until the new year to book the huge gains garnered during 2023. The market continues to digest critical employment data, as it watches movements in the 10-year Treasury closely, a key benchmark rate for asset pricing that now stands just north of 4%. Many bulls are saying 2024 may be a difficult year after the worst start in … Read more