Filed under: Company News, Earnings, Market News, Industry News, Investing
Buy-and-hold investors have gotten the last laugh on the “Sell in May and go away” adage pumpers. The market has rallied to hit new highs during the historically sleepy summer months, leaving market timers baffled.
Naturally, it’s not just the major market indexes hitting fresh levels. Let’s go over a few prolific companies that delivered all-time highs this season.
Apple (AAPL)
It’s fitting that the world’s largest consumer tech company should hit new highs this summer, just as it’s gearing up to introduce the iPhone 6 and other potential game changers. The last time that Apple set a new high was two years ago, the day that the iPhone 5 hit retailers.
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Apple meandered after that. Growth began to slow, and margins started to contract. Apple isn’t perfect. We’ve seen iPod sales slide for a couple of years, and even the once-hot iPad has suffered back-to-back quarters of year-over-year declines. However, the tablet’s fall from grace has coincided with PCs coming back in favor, and Apple is there to make the most of it with its line of Macs and MacBooks.
Either way, the iPhone and Mac are pushing sales higher, and unlike last year, profitability is moving higher in the process.
Tesla Motors (TSLA)
One of last year’s biggest winners was Tesla, the company behind the all-electric Model S sedan. The stock more than quadrupled in 2013 and, defying accusations and determined short-sellers arguing that it was one of this year’s most overvalued investments, has nearly doubled in 2014.
Tesla stock may seem as expensive as its luxury sedan. A $35 billion market cap is more than a bit rich for a company that delivered just 7,579 cars in its latest quarter. However, the real buzz for Tesla is the future. The Model X crossover hits the market next year, and Tesla expects to be delivering cars at an annualized pace of 100,000 a year by the end of next year. In a couple of years the more affordable Model III is expected to roll out, and Tesla is leading the way to be an early adopter in the promising field of self-driving cars.
Netflix (NFLX)
The world’s leading video streaming service was another hot stock in 2013. In fact, it was the S&P 500’s best performer. However, it too was tagged to tumble this year. Naysayers felt that a company with billions — $7.7 billion to be exact — in streaming content obligations would be vulnerable if subscribers begin defecting.
Why would they leave? With its global subscriber base now topping 50 million, it can afford to outbid anybody for content. It has momentum. It’s also become a place where content creators come to seek exclusive deals for original content. It’s funny what a few Emmys will do for your street cred in Tinseltown.
Netflix isn’t cheap. Even looking out to 2015 we find it trading for more than 70 times Wall Street’s profit estimates. As long as there are no legitimate challengers on the horizon, Netflix should continue to thrive.
Baidu (BIDU)
China’s leading search engine has stormed back into “market darling” fancy. It seemed vulnerable two summers ago when a leading online security and Web browser provider launched its own search engine. It gained traction at Baidu’s expense, but Baidu was able to still grow its base of marketers and expand into new areas including online travel, smartphone app marketplaces, and streaming video.
Baidu will always have the challenges associated with operating in a country with restrictive policies, but investors are finding it hard to stay away. When you’re the top dog in the world’s most populous nation — a country that’s growing a lot faster than the planet on average — good things happen.
Activision Blizzard (ATVI)
The country’s largest video game publisher is winning the gamer game this summer. Activision Blizzard was slumping not too long ago. Die-hard gamers had tired of building out their game libraries for their Xbox 360 and PS3 consoles. On the PC front, its once-dominant World of Warcraft franchise peaked in 2010 when it treated 12 million players to its virtual realm.
The video game industry has turned things around since the November launch of the Xbox One and PS4. Most of the gains have happened on the hardware end, but software companies are starting to enjoy the fruits of the upgrade cycle and the high-margin merits of digital delivery. Activision Blizzard has blown through Wall Street’s profit targets in each of the past four quarters.
Activision Blizzard investors are winning — and the same can be said of those who owned Apple, Tesla, Netflix and Baidu during this lucrative summer for growth stock investors.
Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Activision Blizzard, Apple, Baidu, Netflix and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. Our analysts have put together a free report on a group of high-yielding stocks that should be in any income investor’s portfolio.
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Source: Investing
