New Trade: Long Apple ($AAPL) & Short Adobe ($ADBE)

By: ispeculatornew
Date posted: 07.30.2012 (5:00 am) | Write a Comment  (0 Comments)

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Another week filled with ups and downs last week but I did have a very difficult time on the trade where I was long Apple vs AOL which ended up being closed. AOL has clearly been the surprise of the year so far in the tech/web space as it continues to outperform all rivals. I’m not convinced it can keep up but shorting it right now seems a bit risky.

Let’s get right to it and look at the numbers:

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Long Apple ($AAPL)

No doubt about it, I’m a big believer in Apple. The numbers did come out a bit lower than I and others expected but I think it’s crazy to say that the stock is now on its way down. The value is incredible, its the best buying opportunity of the year and the fact that revenues were a bit lower means nothing. It’s the same story every year. Why would consumers jump on a year old version of the iPhone when everyone knows that the iPhone 5 will likely be released in September? I would expect Q4 numbers to be record ones. The fact that Apple trades at a forward P/E that is almost identical to Adobe’s makes no sense to me. I think Apple, despite its size, remains in fairly high growth mode.

Short Adobe ($ADBE)

It’s a bit ironic to trade Apple against Adobe isn’t it? Despite Steve Jobs no longer being in this world, there remains little love between these two companies and in many ways, Apple continues to make life more difficult for Adobe. I do think the company is decent but its growth doesn’t justify trading at a P/E so close to Apple’s.

Disclosure: No positions on Apple ($AAPL) or Adobe ($ADBE), this trade will be opened on Monday morning

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