~ ITZ STOCK CHARTZ ~

ITZ Raises Price Target On Apple

2012-01-27T21:52:00.004-05:00

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Apple Inc. shattered expectations for fiscal 1Q12, as revenue topped the consensus estimate by $10 billion and net income exceeded $13 billion - in just 90 days. Gross margins, which a year ago were in the high 30s, came in above 44%, unheard of for a hardware company catering to consumers. Apple ended the quarter, its first full reporting period post-Steve Jobs, with about $98 billion in cash.

The unbelieveable thing about AAPL stock is that it is not particularly expensive, even though the share price has more than doubled in recent years; that is because earnings and cash flow are growing so much faster. ITZ believes that AAPL shares are trading at reasonable multiples on estimates that now better capture Apple's earnings power.

The shares trade at 9.9xs ITZ FY12 forecast and at 9.3xs ITZ FY13 projection, compared to an average P/E of 19.6 over the past five years (FY07-FY11). This is actually a discount to the peer group as well as the broad market. ITZ believes a much higher peer-group premium is justified given Apple's ability to generate healthy demand for its products even in a feeble economy.

The fundamental valuation model points to a price above $700.

Appreciation to ITZ's target of $625 (raised from $555) LINK implies a risk-adjusted return of more than 40% from current levels.

FINANCIAL STRENGTH

Apple carries no debt.
Cash & short- and long-term investments totaled $98 billion at the end of 1Q12, up from $81 billion at the end of fiscal 2011, $65.8 billion at the end of 2Q11, $51 billion at the end of fiscal 2010, and $33.9 billion at the end of 2009.

Cash flow from operations was $17.5 billion for 1Q12, compared with $9.8 billlion a year earlier. Cash flow from operations was $37.5 billion in FY11, compared with $18.6 billion in FY10 and $10.2 billion in FY09.

EARNINGS & GROWTH ANALYSIS
For the first quarter of the September 2012 fiscal year, Apple recorded revenue of $46.3 billion, up 73% year-over-year and 64% sequentially. Gross margin expanded sequentially to 44.7% in 1Q12 from 40.3% in 4Q11 and was well above the 38.5% recorded a year earlier. Operating income exploded to $17.34 billion in 1Q12, up from $8.7 billion in fiscal 4Q11 and $7.83 billion a year earlier.

Net income was $13.06 billion in 1Q12, for a 28.2% net margin. That compares with net income of $6.6 billion in 4Q11 and $6.0 billion a year earlier. GAAP earnings totaled $13.87 per diluted share in fiscal 1Q12, compared with $7.05 per diluted share in 4Q11 and $6.43 in 1Q11.

Management is projecting revenue of $32.5 billion in the post-holiday quarter, as well as earnings of $8.50 per diluted share.
Applying the 1.15 multiplier to revenue (without even considering market fundamentals), suggests revenue about $5 billion higher than management's current guidance, i.e., in the $38 billion range. ITZ expects the consensus to coalesce around this number, triggering an EPS consensus between $10 and $11 for fiscal 2Q12.
Given the huge start to the fiscal year, and even without making significant changes to the quarterly outlooks for 2Q through 4Q.

ITZ is raising FY12 forecast to $45 per diluted share with a 14 pe and a price objective of $625. ITZ is also raising the forecast for FY13 to $48. ITZ long-term EPS growth rate forecast for AAPL is 15%.

Tara Hedlund, Turner Investments, weighs in on the Apple phenomenon.

Past ITZ Posts

Time To Take Some Profits On This Silver Stock

2012-01-26T13:51:00.001-05:00

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At the end of December 2011 Read Post, ITZ suggested entering Silver Wheaton SLW @ $27.50. Silver the commodity as well as Silver Wheaton have had a nice run in 4 weeks. ITZ highlighted silver as well as gold and crude oil yesterday, post the Fed decision to extend low interest rates until the end of 2014. LINK

With the run up in SLW, it would be prudent to take some money off the table here, perhaps a 1/4 position or sell some out-of-the-money call options.

Past ITZ Posts

S&P 500...Does It Go Higher?

2012-01-26T13:01:00.002-05:00

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Insight on why a six to ten percent drop from the current level of 1320 in the S&P is on the way, with Gina Sanchez, Roubini Global Economics (RGE) director of equity and asset allocation strategy.

Carter Worth, Oppenheimer Asset Management chief market strategist, checks the charts to get a read on whether technical indicators are signaling stocks are set for a breakout, or sell-off.

Past ITZ Posts

Euro Testing Resistance

2012-01-26T10:54:00.000-05:00

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As noted in prior ITZ blog post that the Euro was set to move higher towards 1.32 READ

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Past ITZ Posts Click Here

This Index Says Oil Could Go Lower

2012-01-25T18:17:00.000-05:00

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One of the ratio indexes ITZ tracks is the $Gold ~ $WTIC Ratio which broke above a key level today and raises a caution flag...read more

CNBC's Sharon Epperson discusses the day's activity in the commodities markets and looks at where oil and precious metals are likely headed tomorrow. The risk-on trade, it seems, is back.

Past ITZ Posts

Commodity Update: Oil- Gold-Silver 1-25-12

2012-01-25T11:45:00.002-05:00

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Itz observations on Oil, Gold and Silver. Click on charts to expand image

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Apple Crushes Profit Estimates as iPhone, iPad Sales Soar

2012-01-24T18:26:00.001-05:00

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KAA..CHING!!!

Apple reported Q1 2012 earnings after the close Tuesday...and well they just crushed them...blowing away street estimates on earnings revenues and units sales.

Fiscal first-quarter earnings excluding items of $13.87 a share, double the $6.43 a share recorded in the year-earlier period.

Revenue jumped 73% to $46.3 billion from $26.74 billion a year ago.

Analysts had expected earnings excluding items of $10.10 per share on revenue of $38.9 billion, according to a consensus estimate from Thomson Reuters. The company also said it ended the quarter with $97.6 billion in cash.

It sold 37 million iPhones, 15.4 million iPads and 5.2 million Macs during the quarter — all new records and all beating analysts' expectations.

These results off of iPad 2 and iPhone 4S and with the passing of CEO Steve Jobs. ITZ expects 2012 to deliver the same as Apple plans on delivering several new products iPad 3, iPhone 5 and perhaps iTV.

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Ahead of Apple Earnings...What To Do?

2012-01-24T10:49:00.004-05:00

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Apple reports Q1 earnings after the close today, the stock has had a big move since ITZ suggested entry. >>READ and when ITZ noted an Island Top formation >>READ

Past earnings releases LINK

Here's a current chart and past earnings releases, the yellow are represents following 2 weeks.
Jim Cramer is spot on...if you trade Apple then sell, but as an investor hold and buy any pullback.
ITZ continues to hold to the $555 year end price objective.

Mad Money host Jim Cramer says investors need to be prepared for Apple to selloff when it reports earnings on Tuesday, but then be prepared to buy it the next day, but only if the stock is down.

Apple is out with earnings today after the bell on the same day in 1984 the very first Mac was introduced. Insight on whether the stock will see a correction, with Brian Marshall, ISI Group IT hardware/data networking analyst.

Time to Short the S&P 500

2012-01-23T10:58:00.000-05:00

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ITZ suggests entering Proshares Ultra Pro Short S&P500 etf ticker symbol SPXU. Lets place a half-position @ $11.30 with a stop at $11.20. ITZ has target 1325 on the S&P500 as a nearterm top and looking for a pullback toward 1285. For up todate trade moves follow ITZ on Twitter $SPX Chart

Where Does Oil Go From Here?

2012-01-19T19:26:00.001-05:00

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Followup to Proshares Ultra Crude Oil ETF (UCO) ....Read

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Amazon Update

2012-01-19T10:06:00.002-05:00

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Amazon reports earnings on the 31st, expectations are that the Kindle Fire will be better than forecasted. On the chart it continues to rally strong since breaking out of the Falling Wedge formation ITZ noted READ.
Price Objective near term $200.

Past ITZ Posts

Euro Heading Higher?

2012-01-18T16:37:00.002-05:00

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Being short the Euro has become a crowded trade, ITZ believes it could rally near term on bullish auction news.

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Golden Cross

2012-01-16T16:13:00.000-05:00

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One trigger where we generally see money move in and out of the market is based on the “golden cross,” which identifies when the 50-day short-term average crosses above the 200-day long-term average of a stock or index. Currently, the S&P 500 ($SPX) is closing in on that happening within a few weeks.

Granted it is just one indicator and one should not solely rely on just one.
But there’s a good historical reason traders use this mechanical trigger. Over the past 20 years, the 50-day line crossing above the 200-day average of the S&P 500 Index resulted in surprisingly bullish data. Of the nine times this event has occurred in those 20 years, the S&P 500 averaged a 23 percent increase before the market reversed. According to John Spinello, chief technical strategist at Jefferies Group, if you bought the S&P 500 index based on the eight “golden cross” events in the past 20 years and held until there was a “death cross”, you would have a 191% return.

It is important to remember that these patterns hold true on average - not every single time.As with seasonality or presidential cycles, they hold powerful sway over the market but are never to be considered as a dictatorial mandate.

Chris Johnson, Johnson Research Group CEO, discusses how investors should play the "golden cross." He highlights which sectors would benefit from such a formation.

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WTI Oil Sells Off

2012-01-13T10:02:00.001-05:00

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ITZ has used Proshares UCO & SCO over the past few years trading WTI Crude Oil. Past Posts LINK -- LINK -- LINK

Watching Charts to Predict Markets

2012-01-12T11:41:00.000-05:00

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A look at the trend lines of the S&P 500 and where the markets are headed, with Jeffrey Weiss, Tejas Securities Group chief technical analyst.

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Commodities Update 1-11-12

2012-01-11T19:13:00.000-05:00

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S&P 500 Update

2012-01-10T09:59:00.000-05:00

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ECA Marcellus Trust (ECT) Update

2012-01-09T17:57:00.000-05:00

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ITZ suggested ECA Marcellus ECT around $24.50 LINK, it soldoff today on an Oppenheimer downgrade and urged investors to liquidate their positions in the stock, as the firm thinks that 2012 consensus estimates for the name are too high, while the return on investment is unattractive at the current price. Target $20.
*Note earnings are due out February 13th.

Past ITZ Posts Click Here

This Copper Stock Set To Break Higher

2012-01-06T14:41:00.000-05:00

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Amazon Break Out!!!

2012-01-06T12:01:00.001-05:00

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Amazon has finally broke out of the Falling Wedge formation ITZ has highlighted for several weeks now. Yesterday's post noted a break over $180. LINK

ITZ has speculated that Kindle FIRE was going to be a hot holiday gift, not so much on e-reader but a play on video. News today read

ITZ Continues To See Higher Energy Price in 2012

2012-01-05T17:44:00.000-05:00

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On the technical front, Jordan Kotick, of Barclays Capital

Past ITZ Posts Click Here

Amazon Update

2012-01-05T14:25:00.001-05:00

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Still looking for a breakout... past charts 12/14/11 and 12/15/11

$110 Crude Oil

2012-01-04T18:34:00.000-05:00

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ITZ has for sometime now been bullish on WTI Oil, targeting $110 in early 2012. Today one of the indicators ITZ tracks the $WTIC:TLT ratio is up against the 0.87/0.88 level and the Commodity Index $CRB is as well hitting trend resistance. Breakout here and we should see crude oil run towards $110 in coming weeks. ITZ has favored using Proshares Ultra Crude ETF (UCO) & Direxion Energy Bull (ERX) to get a levered move on rising WTI oil.

Below are followup charts to those posted a few weeks ago Previous Charts

Darren Wolfberg, BNP Paribas, discuss $110 crude oil.

Past ITZ Charts Click Here

WTI Oil Continues To Climb Higher

2012-01-03T13:26:00.002-05:00

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WTI Crude Oil is breaking higher today around $102.50 on U.S. - Iranian geopolitical tensions. ITZ has focused on Proshares Ultra Crude Oil ETF - UCO & Direxion Energy Bul - ERX. Noting an Inverted Head & Shoulders formation on the daily chart. ERX Chart

Past ITZ Posts Click Here

Silver Hits Downside Target...What Next?

2011-12-29T19:56:00.000-05:00

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Silver tested $26 today as ITZ was calling for a few weeks ago Read Post

Itz suggested then that Silver Wheaton under $28 was a BUY, entered @ $27.50 this morning. SET STOP @ $25.

Even Jon Najarian of optionMONSTER agrees that SLW is a BUY here and going a lot higher.

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Past ITZ Posts Click Here