Two million iPhone 5s sold in one day... Another 10.4% dividend raise... Our exclusive list of dividend-raisers... Steve's housing call...
Apple said advanced sales of its new iPhone 5 topped 2 million units in one day – more than double the record set by the previous model. And some analysts estimate Apple could sell 50 million units between October and December.
Today, shares of Apple crossed $700 – a new all-time high. But the stock is still cheap, according to Amber Lee Mason and Brian Hunt, co-editors of our newest trading service, DailyWealth Trader. Amber and Brian went long Apple in July, when the stock was trading around $600 a share. Their readers are up 16% on the trade since then.
From yesterday's DailyWealth Trader…
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Even now, Apple is cheaper than the market. It's trading at about 13 times next year's earnings. If you take into account the company's still-massive cash hoard, that number is just 12.6, according to Barron's. Meanwhile, the broad S&P 500 Index – which is full of businesses that don't even compare to Apple – is trading at 14 times next year's earnings. |
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So even after its big gains over the last 12 months, Apple is still cheap enough to buy here. |
Apple's current market cap is more than $650 billion... A tech executive we know with knowledge of the company says he believes Apple will reach a $1 trillion market cap. It's one of the greatest businesses out there. And customers are still fanatical about its products (even after the fifth generation). As Amber and Brian said, "stay long."
Like clockwork, another World Dominating business has raised its dividend... Last Wednesday, Philip Morris International raised its dividend by 10.4%. Since it was spun off from Altria Group in 2008, Philip Morris has raised its dividend every year at an average rate of 13% per year. The S&P 500 is up just 11% since I (Dan Ferris) first recommended the stock to my Extreme Value subscribers in March 2008. Philip Morris has returned more than 100% since then.
This is more evidence of why we say buying great, highly profitable, shareholder-friendly businesses is the surest way to make money in the market.
Philip Morris owns the No. 1 cigarette brand – Marlboro – outside the U.S. The cigarette industry is in decline in the United States... But it's growing internationally.
Philip Morris treats shareholders better than most of the stocks you could own. It raised its dividend at an inflation-crushing 13% a year since it was spun off in 2008… And it has bought back more than 21% of its outstanding shares during that time.
Many companies' share repurchase programs don't seem to bear fruit, but Philip Morris' has created massive shareholder value. The company bought back its shares at an average of about $54 each. Today, the stock trades for more than $91 a share. So the buybacks have created massive value for remaining shareholders.
Earlier this year, Philip Morris announced another $18 billion, three-year share repurchase program. The stock is trading for more than my maximum recommended buy price… But I've identified a few others like Philip Morris for subscribers… stocks you're crazy not to own at current prices.
I recommend a lot of different kinds of stocks in Extreme Value. But in The 12% Letter, I focus on stocks similar to Philip Morris International – great, profitable businesses that pay consistent (and rising) dividends.
One of these World Dominating Dividend Grower (WDDG) stocks is still trading about 8% below my maximum recommended buy price. It dominates its industry with a market share more than double that of its nearest competitor. And it has increased its market share steadily for decades.
Investors don't like its industry right now, but I think that'll change in the coming year, as the sector recovers and this dominator throws its weight around and raises prices. Over the last 10 years, it raised its dividend about 14% a year on average.
The stock is dirt-cheap, considering how high-quality the business is. WDDGs don't usually stay cheap for long (especially these days).
My newest 12% Letter recommendation comes out Thursday. It's paying a tax-advantaged yield of more than 6%. So it's probably more like the after-tax payout from a stock yielding about 7% or so.
In yesterday's Digest, we detailed how True Wealth editor Steve Sjuggerud's "Bernanke Asset Bubble" thesis is paying off. Steve's been equally adamant about the opportunity housing represents… and he's been right about that, too.
We detailed his view on housing (along with other bullish housing notes) in the August 22 Digest. Today… the National Association of Home Builders (NAHB) trade association released data showing homebuilder confidence is at its highest level since June 2006... The NAHB Housing Market Index increased to 40 in September, besting expectations of 38.
"This fifth consecutive month of improvement in builder confidence provides further assurance that the housing market is moving in a positive direction, but there's still a long way to go on the road to recovery and several obstacles are slowing our progress," NAHB Chairman Barry Rutenberg said in a statement announcing the latest index data.
New 52-week highs (as of 9/17/12): Guggenheim BulletShares 2015 High Yield Corporate Bond Fund (BSJF), Fidelity Select Medical Equipment & Systems Fund (FSMEX), iShares Nasdaq Biotechnology Fund (IBB), ProShares Ultra Health Care Fund (RXL), Yamana Gold (AUY), Procter & Gamble (PG), and GenMark Diagnostics (GNMK).
In today's mailbag, one subscriber describes how he's used the "education" our services provide. Send your e-mail to feedback@stansberryresearch.com.
"After many years working in numerous fields including banking, early computer tech, telecommunications, power & water industry, marine transportation and construction, private ownership of 2 small businesses including property development and retail sales and installation of the glass and fenestration products, meanwhile always trying to self learn, trying my luck at investing and getting scammed and losing in the market, you came to my attention about a year ago.
"Since then with your straight forward explanations and insights as to the workings of economics and the markets I have reconditioned my portfolio and it is turning around to hedge and protect my assets against the erosion of the dollar. It is an education that I couldn't seem to accumulate within my busy schedule before. Thanks, you're doing a good thing." – Paid-up subscriber Doug Atkins
Regards,
Dan Ferris and Sean Goldsmith
Medford, Oregon and New York, New York
September 18, 2012