March 2011


Technology companies are always prone to obsolescence, whether that be in technology itself, or purely in consumer taste, competition is always around the corner.

AAPL has been remarkable over the last few years in that they have bucked the competition on both counts. However, Android seems to be cutting into their market share. This evidence is present in their financial statements that discloses a significant Inventory and Receivables bulge comparative to Revenues.

Revenues………………+52%
Inventory………………+130%
Receivables…………..+96%

This of course may well be due simply to the ongoing recession. This bulge has been reduced when you look at the Quarterly figures, however, I suspect that AAPL earnings might well disappoint for the first time in years. AAPL is almost a given to provide an estimate, and then significantly beat those estimates.

What if their estimate is accurate, or even slightly lower? That would be a surprise. Stocks don’t like surprises of the lower kind. Even the chart is suggestive of a pause in the uptrend. This looks to be a potential area to either sell-out if you are a long term holder, or get short if you are a speculator.

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Two commodities that correlate to two of the stocks that I hold. Corn to BIOF and Oil to JBLU. Both obviously in these days of inflation fueled by the Federal Reserve and Bernanke, can go far higher.

Corn Planted Acreage Up 5 Percent from 2010
Soybean Acreage Down 1 Percent
All Wheat Acreage Up 8 Percent
All Cotton Acreage Up 15 Percent

Corn growers intend to plant 92.2 million acres of corn for all purposes in 2011, up 5 percent from last year and 7 percent higher than in 2009. If realized, this will be the second highest planted acreage in the United States since 1944, behind only the 93.5 million acres planted in 2007. Acreage increases of 250,000 or more are expected in Iowa, Kansas, Nebraska, North Dakota, Ohio, and South Dakota. The largest decrease is expected in Texas, down 150,000 acres.

Obviously the higher the price, the more supply will be called forth [planted] and just as obviously, this could take some time to work through.

Oil of course has it’s own set of problems, none of which are really being resolved currently. The really major one being Peak Oil and the inability to drive growth with a comparably cheap energy source.

Adding to my incredibly speculative BIOF purchase, I have two more:

I’ll be adding three more fundamental based stocks and adding the analysis on BIOF which is an incredibly speculative purchase.

AAPL I suggest will likely disappoint in earnings, possibly for the first time in years. Time to get short.

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Tuesday, March 29, 2011 at 4:08 pm | 1,768 views

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