Who can take price? Who can raise price? Who has to eat price?
Those are the three questions that have defined this reporting period and if the answer is that a company can raise price and still sell its wares, that's a company worth betting on.
I know after a day when Apple's (AAPL) stock has been absolutely crushed, just downright laid to waste, I know it seems a little ridiculous but no one took price this quarter better than this company.
How do I know this? Because the company reveals this kind of data right in its release. As we told members of Action Alerts PLUS this morning: "Apple's higher priced items sold better than what was expected as the average selling price compared favorably to the $751 price the Street was looking for and represents a $175 increase from just a year ago."
To look at the stock today is to think that they were losing money on every phone they sell. Of course, it's the opposite: they are coining money selling phones and making even more - in terms of gross profit on the services stream, which hit $9.9 billion for an increase of 5% sequentially and 17% year over year.
I want to contrast that with a company that sells products that many now consider out of date or not in keeping with what gen x y an z want: Kraft Heinz. This is a company that stands for processed food and that makes it the enemy of the new consumer and it shows right in its report when it says, "pricing was down .9% percentage points, driven by increased promotional support." This company can't take much price that I can see and that's why its stock plummeted. I would argue that without a company to merge and cut costs, this one's just boxed into a corner, the corner of the store that no one goes to. Their saving grace is cheese whiz which goes on top of a Geno's cheese steak in Philly. Remember to ask for it like this: "Wid whiz" and tell 'em Cramer sent you.
Take Two (TTWO) can take price. It's Red Dead Redemption II. It sold $725 million of the video game this past weekend, and called it "the single biggest opening weekend in the history of entertainment."
But Kimberly (KMB) is having trouble taking price in its diaper business, being beaten to a pulp - pun intended by private label diapers, especially in China.
The quarter from Starbucks (SBUX) reveals it can still take price. In fact, the price of coffee seems downright elastic in this country for these guys and that's a big reason why its stock is flying. I don't think it's done either. And Facebook (FB) , for all the sturm and drang, has been able to take price because it reaches the so-called right demographic while newspapers and magazines forever have to discount.
So, you say, how important is this really if the stock of Apple, the largest company in the world, is getting obliterated despite the average selling price boost. Two reasons: one is a forecast that, because of timing issues of new phones made it so the future looks less bright than it really is. The other is because the company decided that with this quarter it's no longer giving out numbers of phones sold or any other product for that matter. You know my view of Apple, own it, don't trade it, but I agree that this decision was conveyed quite poorly because, when married with the timing issue, genuinely makes Apple look like it is worried about its own sales.
I like as much disclosure as possible but I do not blame Apple for not giving out those numbers. I regard Apple as the greatest consumer packaged goods company of our time and you don't see P&G's (PG) Gillette tell you how many razors or blades it has sold or Colgate (CL) giving you tubes of toothpaste numbers. They were ham-handed in the way they did it because it obscured a remarkable quarter but my advice now is to let the stock settle down and let those who do not believe Tim Cook's explanation to be as forthcoming as I believe it is. Oh and remember, if you sell it next week, its more than likely that some of it is going to go to Apple with the world's biggest buyback. If you can't handle the pain, leave the stock. But remember how many times those sales worked out for people. From the looks of where the stock's come from here's my answer: Never.
(This article has been updated from an earlier version.)