Bad Luck for Apple, Good Luck for Research in Motion or is it Vice Versa?
Jason is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I know what you're thinking. "Did Apple just fire off one hundred dollars from its share price in the last six months? Is Research in Motion poised to return from where it fell over five years ago?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But be that as it may, the tech sector is one of the most volatile in the world, and could easily blow your portfolio clean away. So before you play your hunch, you've got to ask yourself one question: Do I feel lucky?
Well, do ya, punk?
Apple (NASDAQ: AAPL), the iconic tech beacon of Cupertino, has been trending down recently. Some investors have shied away from its stock after hearing news like this from The Wall Street Journal:
Apple Inc. has cut its component orders for the iPhone 5 because of weaker-than-expected demand, people familiar with the situation said Monday, indicating sales of the latest smartphone haven't been as strong as anticipated.
Apple's orders for iPhone 5 screens for the first quarter, for example, have dropped to roughly half of what the company had planned to order, the people said.
The Cupertino, Calif., company also cut orders for components other than screens...
In comparison, the jewel of Waterloo, Research In Motion (NASDAQ: BBRY), also known as the granddaddy of smartphone tech, seems poised for a return to prominence, as news on the street swirls about the pending performance of its latest addition to the Blackberry family.
As noted in this report from Mashable.com's Seth Fiegerman: "Hype for the BlackBerry 10 has helped push RIM's stock above the single-digits in recent months, even as the company reported its first ever decline in subscribers in December. The stock has nearly doubled from just under $8 at the end of October..."
These days, Apple (with a market cap of $470.3 billion) sports a P/E of 11.3 and a return on equity of 50.8, so those investors who are choosing to stay the course with Cupertino do have some reassuring landmarks amid all the downsloping the stock has seen in the last three months. Back in October 2012, Apple was touching well over $600 per share, a far cry from the price points investors have seen in early January 2013.
On the other hand, Research In Motion (with a market Cap of $8.3 billion) currently has a P/E of -9.5 and a return on equity of -9.9. Investors who are buying long into the stock's current run are clearly placing their dollars on the promise of the BlackBerry 10, and not much more.
Foolish Bottom Line
When you take into account the current trend for these stocks, it seems that their movement is based more on sand than stone. In each case, the stocks are moving contrary to their fundamentals, telling me each trend will soon pass. I mean, ponder it for just a moment: Do you think Apple is really going to remain "doomed," or that BlackBerry is really going to “Storm“ (pun intended) the smartphone market and outpace anything other than the Windows phone in the next quarter?
Investors who take their long cues in these stocks based solely on the trend data from the last three months really must feel lucky.
MindOverMarket has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!