The Daily Dose: Prepping for the Future

 | Sep 12, 2013 | 9:00 AM EDT
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Here is a lightning-quick thought on Apple (AAPL) while I have an open forum. Before the product release extravaganza, most on the Street that I talked with and secretly stalk were quietly concerned about Apple sacrificing margin for global volume gains on steroids amid a cheaper iPhone.

Now that Apple's new plastic 5c iPhone (priced at $733 unsubsidized in communist and black market country China) is still priced at a level that keeps many a consumer on the outside looking in, the opinion on the Street is that the product release was a letdown. Apparently, global volumes will not be as gangbusters and due to this, margins are likely to be whacked given the expensive innards of the device. You are damned if you do and damned if you don't, I suppose.

If Apple was a name on which I was doing research work for clients, I would state that Sept. 10, 2013, was a net positive (and I am no Apple stock fanboy) when looking out on a six-month time horizon. Expectations were knocked down. From what I can tell, the new products are more transformative and set the stage for buzzier rollouts in 2014. Volume coming from every which angle means a cash giveaway to shareholders, post-holidays.

On to the real topic for today, prepping for the future. The only way to stay five steps ahead of everyone else in the crowded field of investing is to take detailed, outright-obsessive notes on a daily basis, and then build a thesis each day before going to bed. I am prepping for two events, one that I will share more on Friday (personal) and another one off in the distance.

Off in the Distance: Third Quarter 2013 Earnings Season

We are already receiving clues on the third quarter performance potential of companies. You really have to listen to these investment bank presentations, which I know the majority overlook or read a transcript on. That is not the same as listening to human beings and trying to detect voice changes to challenging questions!!

Here are a few of the stories that are helping me construct an initial thesis on third quarter earnings season.

HanesBrands (HBI): Back to school started softer than expected, noted the company, but then sell through improved in late August/early September. What does this company peddle? It provides basics at J.C. Penney (JCP) and Wal-Mart (WMT).

HanesBrands basically said that to share a reiterated guidance range, its retail partners had to make its no frills offerings cheaper to consumers (discounts intensified as back to school progressed). This isn't rocket science analysis, just a bunch of dot-connecting by a person (me) with no life other than to help drive gains for clients and educate on how I do/see things. I am wondering, based on the HanesBrands news, if we are poised for consumer discretionary warnings in early October (by then, misses should be factored in).

Texas Instruments (TXN): In-line guidance arrived at the same time the company's auto and industrial businesses continue to outperform its PC business. This is not very encouraging for Microsoft, its peers and its supply chain. And there is a minor red flag on the strength of the recovery in Europe that has attracted client inflows. Looking at how materials and industrials are positioned relative to their 50-day moving averages (overbought land), Texas Instruments commentary is a development that could haunt the unprepared in early October.

Apple Changed my Day, and Life

On Wednesday, I walked around two Best Buy stores with clients, and in the process broke down and purchased an iPhone 5 for a cool $99 from a Verizon store. This is my first ever iPhone after having a Droid for over two years (a Blackberry before). All I can say is that "I get it" now with the iPhone phenomenon; the products are so darn intuitive it's frightening. The phone is far superior to the Samsungs I tried; it may not have a couple "cool" features, but the flow of the product in my view eclipses the need to be cool with a gimmicky new feature that won't be used two weeks after the initial purchase. I have been #Appled.

As an aside, a couple other things I saw in my travels:

  • Consumers are flocking to AT&T (T) and Verizon (VZ) stores today trying to get the iPhone 5S. One conversation I overheard with a sales rep: "But I saw it on TV yesterday, it's not out?"
  • I have been chronicling the mysterious rise in shares of RadioShack (RSH) of late. Man, I don't get that place. Out-of-stock signs are all over the place, plus there were three employees sitting around looking for traffic.
  • These portable phone charger packs you carry in your pocket to provide an instant charge (price range $50 to $110) are multiplying in the aisles of Best Buy (BBY), and are being pushed by Verizon sales folk. I dig the product.

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