6/6/2014 9:45 PM ET
Apple slices among 10 picks to watch
On the eve its 7-for-1 stock split, Apple appears on StockScouter's latest list of 10 recommended picks.
Compiled from StockScouter ratings by Verus Analytics
While Apple (AAPL) didn't exactly dazzle at its Worldwide Developers Conference Monday -- those hoping for an iWatch, mobile payments platform or other groundbreaking new product were treated instead to some modest Mac and mobile software updates -- that hasn't stopped its investors from seeing stars.
Apple shares have rallied more than 23 percent since mid-April, when the tech giant reported strong earnings and announced plans to raise its dividend, increase its share buyback program --and slice up the stock in a 7-for-1 split.
At the close of trading Friday, each $645 share of Apple owned by investors will be carved up into seven shares, worth about $92 apiece.
While stock splits have no mathematical impact -- one $1,000 share is worth the same as 10 $100 shares -- the psychological effect on retail investors is hard to deny.
"Psychology and behavioral finance quirks cannot be discounted," says Jeff Reeves of InvestorPlace. "The bottom line is that some investors won't think Apple is 'cheap' until it has a lower share price."
A lower nominal share price could also pave the way for Apple -- now the 5th largest company in the Fortune 500 -- to enter the Dow Jones Industrial Average ($INDU), a widely watched benchmark of 30 blue-chip American companies. Again, this wouldn't impact the stock -- except from a behavioral investing standpoint.
Shares of Apple get a '10' from the StockScouter rating system on MSN Money, the highest score possible. Based on StockScouter's analysis, AAPL shares are expected to significantly outperform the market over the next six months with less than average risk.
Read the full Scouter report on AAPL here.
StockScouter Top 10 for June 6
Southwest Airlines (LUV)
PEPCO Holdings (POM)
Verizon Communications (VZ)
Annaly Capital Management (NLY)
Real estate investment trust
NorthStar Realty Finance (NRF)
Real estate investment trust
StockScouter beats the market
We think the StockScouter rating system developed by Verus Analytics for MSN Money is one of the best tools you can use when you're trying to decide where to invest.
StockScouter looks for stocks whose business fundamentals, price behavior, valuation and stock-ownership characteristics appear to predict a rising price in the future, based on how those factors have influenced stock prices in the past.
The system assigns each stock an expected six-month return and balances that return against the stock's expected volatility.
Scouter rates stocks on a scale of 1 to 10, and ratings can change daily. Ratings and data in the chart above were current as of this article's publication date.
In addition to the daily top 10 list described above, StockScouter is used by investment research firm Verus Analytics (previously known as the quantitative business unit of Gradient Analytics) to generate a monthly benchmark portfolio of stocks that, refreshed monthly, has outperformed the market since its inception in August 2001.
An investor who began in 2001 by investing in each of the benchmark portfolio's top 10 stocks at the start of the month, selling them at the end of the month and then starting fresh with a new group of 10 stocks, would have generated returns, before trading costs and taxes, of 1,057 percent through May 31, 2014.
Writer Jon Markman, at the time a columnist for MSN Money, collaborated with company researchers on the tool.
Markman suggested rolling over the top 10 stocks every six months to hold down trading costs, a strategy that might be a better fit for most investors; that would yield different results, which would vary based on your starting point.
Performance through May 31, 2014
Full 50 position portfolio
Top 10 portfolio
Inception: August 2001
VIDEO ON MSN MONEY
Apple is scary. Love the momentum and buying, but Apple is a bet on the come. What do they have coming? The I-phone is or will be a commodity, nothing special, nothing that Samsung etal can't sell. So what is Apple? Apple is in for trouble if it can not come out with the next big thing and it has to be a big thing, not just a red colored I-phone.
If you disagree, what you are saying is that you believe Apple WILL come out with the next big thing and then another and another. Ok, but that is a bet on the come. That is dangerous, and the markets are filled with companies which once had "the big thing" and were able to produce a few more "big things' and then ..... You do not want to be holding those stocks when the market figures out there are no "next big things" and the company does not have a deep moat around what it does sell. That is a fact.
Buying Apple is a leap of faith.
For now I am holding Apple based only on momentum and the fact that "faith based investors" will likely respond to this post with bashing, not any facts, but bashing. Watch and see. As long as there are lots of bashers and faith investors I will ride the momentum, but will not be left holding this bag.
If Apple comes out with something other than a red or copper colored phone in the next few months I will ride that momentum as well, scared all the way.
Most of what you read about that great company is just that.
Long and sleeping well.
signed - a former Windows programmer
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Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
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