Wyatt Research Week in Review: July 19-25

After several weeks of not being able to pick up a newspaper without seeing the words “Greece” or “China” emblazoned front and center on the financial page, things have settled down a bit.
That’s not to say that things are exactly rosy these days, with Greece scrambling to pass prerequisite austerity measures for what would be its third bailout of the decade and China still reeling from a stock market comeuppance of epic proportions.
It’s just that as with any macroeconomic news topic, there are just so many ways to skin a cat. That should come as a welcome relief for U.S. investors, as it allows the financial media’s talking heads to bend the ears of the day-trading masses toward the minutiae of Wall Street earnings.
As is often the case, Apple (NASDAQ: AAPL) was a major market mover this week, with the Dow falling 68.25 points Wednesday and the Nasdaq shedding 36.35 points, based largely on Apple’s after-hours earnings report the prior day.
It’s hard to be king, it seems. Despite the fact that the quarterly profits of the world’s most valuable company swelled 38% on a 35% increase in iPhone sales, investors largely logged out. Apple shares fell 4.2% on Wednesday.
What gives? As Wyatt Research analyst Jay Taylor suggested in a post-earnings commentary, “Apple’s biggest problem is that investors have been happily surprised by Apple’s earnings reports so frequently that they expected more than Apple could deliver.” And as Jay pointed out, long-term shareholders shouldn’t be overly concerned about a company with a cash stockpile that tops $200 billion.
Yet perhaps China reared its bearish head again and preyed upon the minds of doubters, as iPhone sales rose 87% in greater China – compared with 5% global growth – leading to concerns about the unsustainability of the Chinese market.
Still, quibbles aside, Apple isn’t about to relinquish its market cap throne anytime soon.
Here are some of my favorite Wyatt Investment Research articles from the week:
How to Cash in on the Vietnam Stock Market Surge – The lifting of a 49% ownership cap at some listed companies by the Vietnamese government has fueled a surge in the Vietnam stock market in July. The move should boost stock market liquidity, and it may, in the not-too-distant future, bump Vietnam up into the emerging market category from its current frontier market status. Here’s how to play it.
Are Big Bank Dividends Back? – Big banks are worth owning. But not for the reasons you’d think. In the years before the financial crisis, big bank dividends that yielded between 3% and 5% were the norm. But when the Federal Reserve ultimately boosts interest rates, banks will be able to collect more money on the loans they make – which could boost big bank dividends in a big way.
The Sure-Fire Way Investors Implode Their Portfolio – NYSE margin debt currently exceeds $500 billion. If we go back to March 2009 – the depths of the stock market correction and the beginning of the current bull market – it was below $200 billion. But margin debt isn’t the only leveraged strategy investors use to get themselves in trouble.
The Construction Sector Is Still Rallying – The U.S. construction and housing market has officially moved from recovery mode to growth mode. On July 16 we learned that builder confidence has returned to levels not seen since 2005. And many construction sector stocks are surging higher.
Gold ETF Coming to a Crossroads – The last four years have not been good for gold investors, as the price for the metal has fallen from a high of $1923.70 per ounce to a recent low of $1,080 per ounce. Given the multiple sovereign debt issues playing out around the globe (Greece and Puerto Rico most prominently), it is hard to believe that gold has continued to fall. Normally investors run to gold during times of financial uncertainty.
The Overlooked Tax Trap Lurking in Your Dividends – Depending on the country a company is tax domiciled, a big chunk of its dividends are unlikely to come your way. The majority of foreign dividends will have a withholding tax applied. Its impact on your dividend income can be consequential. But one country is especially tax efficient. It has no dividend withholding taxes, and no income taxes to boot.
The Quickly Shifting Grocery Industry Landscape – The Albertsons IPO is the latest development in what’s the biggest period of upheaval in the grocery industry since the 1940s. In Europe, supermarket chain Ahold NV (OTC: AHONY) is buying another grocer, Delhaize Group (NYSE: DEG) in a $28 billion deal. But should investors be in the market for grocery stocks?
How to Triple the Apple Dividend – The Apple dividend yields 1.6%. But Wyatt Research expert Andy Crowder has managed to triple the dividend in each of the blue chip stocks held in the High Yield Trader portfolio. Click here to learn more.
Have a great weekend!