A New Indicator for Apple
AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There are all sorts of non-traditional indicators on Wall Street -- the Vix, what's firing up Stock Twits, there's even a service that tracks tweets worldwide. I am proposing a new one ... drumroll please, the SWIX. The Swix is my newly coined sweepstakes index.
Marketing is a huge business and running sweepstakes has been a time-honored way to attract customers. So, what I did was canvass -- or channel check, if you prefer -- the most popular prizes to gauge consumer desire.
Naturally, the most popular prize is cash, closely followed by cars and trips. But is there a way to play that? No, not really. The various car manufacturers are the main sponsors of car giveaways and other sponsors of auto prizes mainly are giving away hybrids of all the different car manufacturers. No edge there. But Apple (NASDAQ: AAPL) gift cards, iPods, iPads, iPhones and iTunes gift cards are the prizes of choice for bloggers, smaller companies and businesses that want to drive up their Facebook likes.
Does this drive sales for Apple? No. What it does do is indicate the strength of consumer demand for their products, the yearning for the sleek, the sophisticated, unique designs of Steve Jobs' vision.
You can Google iPad sweepstakes prizes and find 10,000 listings just for sweeps giving away iPads. These entities do not have some sort of agreement with Apple to give away their products. These sponsors are buying them themselves to give away because people want them so badly and it works for them.
Now, I am an Apple bull and have been in and out of Apple for years. I love the 13.99 P/E, the ecosystem that keeps customers so unbelievably loyal, the jazzed feel of the retail stores, their having the best square foot retail sales of any retailer, heck I love my iPad and I too, would love to have an iPhone with Siri and iPad3. What is the takeaway about my new index is that from what I'm reading on sweeps sites, mommy blogs and Facebook pages is that the folks running the sweepstakes love to give them away as well. They really do get more traffic with Apple giveaways. There are hundreds of independent car dealers giving away iPods and iPads all over the country and you know they are not going to give away something that doesn't work for them.
There is some competition with the Amazon Fire (NASDAQ: AMZN) on the site giveaways and Amazon gift cards are also very popular prizes because they cost much less and I think that is positive for Amazon, but I definitely don't believe it hurts Apple at all. As for other tech gadgets manufactured by Dell, Hewlett-Packard, Samsung, et al., the desire for their products doesn't even come close to the insatiable demand for Apple, Apple, Apple.
One thing I have noticed is that iMac giveaways are definitely not as popular as the other Apple products, which I would read as lessening demand for those, but even softening in that is more than offset by daily news on other Apple products such as prepaid plans available for the iPhone and just today, Virgin Mobile, owned by Sprint,(NYSE: S) plans to sell the iPhone starting June 29. It's just an avalanche of good news.
How can I not be in this stock?
I hope to be in again once my position restriction has passed. Frankly, when I'm not holding Apple I feel a little jittery. One thing I don't like is that Apple became an ATM for people who wanted to get into Facebook and whenever the market turns very ugly, people take profits. Apple dived to the $530's on the FB debut but come the Monday morning afterwards, it started rising again. So, net-net that was a buying opportunity and am I sorry I missed it. Analysts are still giving increasingly higher price targets and I don't think the $644 all time high is that far away.
Apple reports on July 15 and while it may sell off after earnings, yawn, I can find very few reasons not to be in it because if advertisers and businesses from mommy bloggers to the biggest companies in the world want to attract readers, FB friends and just lookey-loos they will offer up Apple.
Ignore the Swix at your own peril but remember each of these giveaways, even the smallest, attract from thousands to hundreds of thousands of entries. They don't say many will enter, few will win for nothing. You can win however by keeping yourself a little Apple core position. And may the odds be ever in your favor.
leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, and Facebook. Motley Fool newsletter services recommend Amazon.com and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.