SAN FRANCISCO (KRON) – On today’s Winners & Losers, KRON4 financial expert Rob Black talks about stocks slipping, retail sales actually being stronger than they’d first appear, and four reasons Apple stock is being upgraded.
Loser: Stocks dip as Wall St. rally loses steam
Stocks slip as the rally on Wall Street that has propelled equity prices higher since mid-June appeared to lose steam amid a fresh batch of retail earnings.
Wall Street also looked ahead to the release of minutes from the Fed’s most recent meeting.
Target said its earnings tumbled close to 90% from a year ago as it has had to mark down prices on unwanted inventory.
Mortgage demand fell last week even as rates declined slightly to 5.45% last week
Best Buy will begin allowing sales of over-the-counter hearing devices without a medical exam, prescription or a fitting adjustment, which could benefit nearly 30 million adults.
Winner: Retail sales are stronger than they look
July’s retail sale numbers were unchanged from June’s, but the consumer may be more resilient than it appeared from the headline number. That’s good news for the economy, which could return to growth in the third quarter.
At first glance, retail sales appeared to be disappointing, but strip out gasoline, and they rose 0.7%, beating forecasts for 0.3%, and a touch higher than they were in June.
That suggests that consumers could be in better shape, especially now that gas prices are falling — a gallon is just $3.943 — leaving them with more cash to spend on other things.
The pullbacks in gas and auto sales were offset by a 2.7% increase in online sales and a 1.5% gain in miscellaneous stores.
This news hasn’t had much impact on the stock market.
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Winner: Four reasons Apple stock just got upgraded
Apple, Inc. stock has been on a tear of late running up 30% since the June market lows. Credit Suisse raised the firm’s rating on Apple to outperform from neutral. There are four main reasons:
- A lot of people use Apple devices. More than 1.8 billion iPhones, computers, and the like are in circulation.
- Apple’s services business will help its profit margins. Apple’s hardware business is great, but its services business is a real moneymaker.
- Overall margins aren’t too shabby either—and should continue growing. Gross margins are around 43%, with inflation and currency headwinds offset by higher Services revenue (growing double digits) and vertical integration of components.
- Apple has a ton of cash: $192 billion, to be specific, which should allow it to do whatever it needs to do to drive returns. Needs to do some research and development? No problem. Return cash to shareholders with dividends and buybacks? Easy. Make an acquisition? Sure thing (as long as it can get regulatory approval).
Add it all up, and Cross sees Apple stock hitting $201, up 17% from Tuesday’s close of $172.03.