Thursday, April 23, 2009

Stock Earnings Surprises

I thought I'd take this Thursday to be a bit optimistic, not that I haven't already been in most of my older posts. US corporations do not generally seem to be in as bad shape as expected, especially the technology section. Google, Apple, Intel, and others have all reported in the last ten days, and they have pretty much blown out analysts estimates. Has the gloom and doom from the media affected their estimates to the negative side?

What Do these Surprises Mean?
When companies like Apple, who sell products at very large mark ups, and are usually more expensive then their competitors, show signs that the economy is not affecting them as much as most experts thought it would, I think there may have been some gross underestimates. I'm not here saying that the dow will shoot up to 9,000 or 10,000 within weeks, or months, but I do think that there will continue to be many more earnings surprises especially in the next 2 Quarters.

Tech Companies
Look for innovation to really show it's teeth in the next few quarters. I expect Apple to release a new product soon, sort of a mix between a Netbook, and an Ipod. I'm guessing it will be a suped up larger screen ipod with capabilities to pretty much do everythign a desktop could do. I also See Google making a major acquisition or two. Twitter? Maybe. But I also think they will continue to innovate themselves, possibly slowly releasing an online harddrive service, as well as maybe even acquiring the newly announced cloud computer video game system Onlive.

The big question is, how bad shape are the banks really in? They have all been reporting profits much higher then analysts predicted, but can they all survive, continued write-downs, foreclosures, and the mess in the credit markets? Tommorow the first Bank Stress tests will be released to the Obama administration. Although the public won't get the specifics, it will tell the administration how solid the main US banks are. Personally I expect most bank stocks to have nice runs in the next 6-12 months. Once the economy is in the all clear, the banks that did survive and acquire other investment firms and banks, will be in a strong position for the future.

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Erica Smith said...
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