The Day Ahead: Get Over Apple Already

 | Jun 11, 2013 | 8:30 AM EDT
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To me, Apple (AAPL) is a big, buzzy name will remain completely irrelevant as an investment until the stock actually begins to move higher on a consistent basis. Yeah, I suppose that iTunes radio will be kind of cool, and it certainly looked sleek on stage while an overpaid geek clicked through slides. But, when all is said and done, any Apple releases between today and the holiday season won't help to bend the healthcare cost curve, solve world hunger issues or speak to the pummeling of housing-related equities due to a spike in U.S. Treasury bond yields. Its product-release schedule fails to address why most retail stocks continue to act like dogs in the face of levitating household net wealth, and it certainly can't make Wal-Mart (WMT) a good corporate citizen.

(By the way, on the topic of Wal-Mart, I think it's a shady company doing things across the globe of which that many folks aren't even aware. I am not worried about getting shut out of Wal-Mart for this comment -- it slapped me down years ago for dropping a sell rating on the stock and, at this point, I couldn't care less if I talk to the company again my lifetime.)

The lesson: Get over your Apple obsession. It ain't 2005. Instead, begin to drill into sectors that have been trading with greater volatility recently, all happening under the surface as the major indices see a few jolts of buying. That said, if you still carry an infatuation with dead-money Apple, on Wednesday I will expound on how a stronger pipeline there could wreak havoc on Netflix (NFLX) -- and why that company, therefore, stinks as an investment.

For now, below are two short stories I developed after talking with Toll Brothers (TOL) and Tempur Sealy (TPX) Monday, and one quick set of comments on Lululemon (LULU).

Tempur Pedic Sleeps Cold

The other day, when I was riding an escalator at Sears (SHLD), I saw a Tempur-Pedic banner hanging on a wall. I thought this was odd, given that Tempur is a premium brand. It says to me the company is reaching for sales distribution in order to offset a downtrend in average selling prices.

In light of this, I thought to ask the company about its exposure to J.C. Penney (JCP). In my frequent trips to the revitalized second floors at Penney, I have noticed a slight expansion in the number of beds and bedding products on offer.

In response to this query, Tempur relayed that J.C. Penney is not a top-50 bedding retailer. (Macy's (M) still looks to still be in the lead on a relative basis.) The company also pointed out that, in J.C. Penney's heyday, 2005, bedding sales totaled roughly $117 million, then sank to $76 million by 2011 -- split in half to get the wholesale component.

In any case, I actually view it a positive that Temper has limited J.C. Penney exposure via its Sealy brand, just in case the department store goes belly up.

Are All Housing Stocks Garbage?

Obviously, in talking to Toll Brothers, I wanted to see whether the stock's pullback has been warranted. I now believe shares have been unduly been swept up into fear of an interest-rate hike.

Here is one key consideration: The average Toll Brothers homebuyer puts down about 30% at closing, with an initial 20% cash deposit. That makes a cancellation a very expensive proposition. Moreover, among these higher-income homebuyers, higher rates could actually heighten the sense of urgency to jump off the sidelines.

The Lululemon Plunge

First off, the slide is entirely due to the departure of CEO Christine Day. She has been the face of the brand for five years, and a strong public advocate of the brand's message. One main concern may be on whether the next CEO will have Day's same level of passion for Lululemon -- passion is very important in keeping investors excited here, given that growth is no longer eye-popping.

I have to say that, on their own, the quarter and guidance were OK. In fact, guidance was a little better than I thought, which I think reflects more black-pant availability. Overall, though, this stock is not my cup of tea.

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