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tv   Mad Money  CNBC  September 20, 2012 6:00pm-7:00pm EDT

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get a little vm ware. see you tomorrow for 9:00 a.m. on "squawk on the street." with jim cramer stars right now. >> i'm jim cramer and welcome to my world. >> you need to get in the game. >> go out of business and he's nuts, they're nuts, they know nothing. >> all i can say is it's a bull market summary. "mad money," you can't afford to mis-hit. hey, i'm cramer, welcome to "mad money." my job, teaching, coaching, entertaining, so call me at 1-800-743-cnbc. what do you do when a sock you own gets slammed up side the head. do you try to figure out if you
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should buy buy buy. >> i want to talk about how to view a price break in a stock, what it means to you and how to tell you or let you learn yourself whether or not it represents an opportunity. and what a great day to do it. because we have got two stocks. norfolk southern, and national bell. which declined by almost identical amounts today. 6.78 for norfolk sudden, and one for national bell, 6.70. first let me just -- traders who either don't see the importance of home work. or don't have the time,
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inclination or smarts to do it. many will look at a stock down $6 and decide somehow that's finished. the stock perhaps somewhat unwittingly, when their prices plummet, these traders think season over. these stocks are not going to make the playoffs. the playoffs? so forget them, they're no longer worth betting on. that's the logic. ladies and gentlemen of the stock jury, i have some news for those of you who share this wrong headed view. there's no seasons and there's no one and done playoffs. stocks are just pieces of paper that in any man reflect the sum total judgment of the -- it can be called into question and found wanting over a longer period of time. what you have to do is try to
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figure out is if that sale the markets put on for a political piece of merchandise is a buying opportunity, or a precursor to one more sale and then another sale, and you get the picture. should the marketplace fake the stalk down far enough, therefore you should be drawn to it? or is this the big sale starting? so you're going to get smoked if you step in and do some buying. which brings us back to what some traders think it didn't make the playoffs. norfolk southern, missed the numbers huge. and it felt compelled to clear out the storehouse. when your stock has -- the root cause of the decline? a major falloff in coal
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shipments. how about bed and bath? what was its sin? a slowing and comparable store sales. numbers are downshifting from 5% growth to 3.5% growth. at the same time gross margins also came in lower than expected. okay, these are all the headline numbers and headline pieces of news, and many informed people, i hope not you, trade on these headlines, however we're investors, we pull the file, meaning we look deeper than the headlines in the calm, after the battle, we take them home, we open the file, we make decisions, we try to figure out whether things are bad and getting worse, which means nee're going to keep selling, whior if things can get better. what's so compelling about this comparison? both companies are extremely well run with good balance
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sheets. they're not fly by nights and not a flash in the pan. if you're going to buy norfolk southern stock, you have to believe that this coal, the approximate cause of the short fall will turn around in a reasonable amount of time. because of the slack in the electric demand, don't need to order more coal, once it gets cold again, these bullish people think, the stock will bounce back. it's not like the company is going to get newfound competition for coal. coal has no competition to speak of and you can't ship the darn stuff by truck. that's the bull thesis. i respectfully, disagree. i don't respectfully, i just disagree. we probably interviewed more utility company execs. i think they're boring, we
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talked to them both on and off the record. many of these utilities feel that the epa under obama is determined to shut down all coal plants, even as their lives aren't used up and there's been billions upon billions of dollars of retrofitting to minimize pollution. they investors will tell you it's impossible without raising the cost of electricity, natural gas, the rival fuel. after years of wild fluctuations in price, but never as low as cold. now gas is now cheaper which pleases the rate payers and it's cleaner, which pleases the epa. no secular growth to the rails and no giant rebound in their stocks at all. now what does that say to me? it suggests that norfolk
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southern didn't go down yet. that means don't buy. don't buy. what about bed and bath. the company is integrating an acquisition for next year. and we know from the housing start numbers we got yesterday is that housing is on the rise. this -- new and didn't homicide. to me that means the price break in bed and bath should be bought and should not be sold. we think if the to be stock were only down $3 or $4 it wouldn't account for the slowdown. $6? may be the beginning of a real and -- the retail experts would rather switch horses, perhaps the limited, which is going the
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opposite direction of bed and bath, decelerating and not accelerating one. i think it's at its 52-week high. i respect the price break, i know that there are plenty of mutual fund owners that will huddle today and decide to sell tomorrow. there are others who didn't finish their sell orders because they didn't want to kill anymore. me, i thank the sellers, me, they have given us a chance to buy. not all sales are created equal. the 6% decline in norfolk southern, i'm calling it a train wreck. bed, bath and beyond, i say wait a few more days, and all aboard, herrmann in ohio. >> i got a quick question for you, because i know you're a hell of a busy man. >> i got time. i'm not jammed right now, i'm
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just here doing the show. >> here we go, unp has been taking a beating in the last couple of days, and i know you like the stock, and i do too to be honest with you, my question is this a good time to jump in on that stock? because it's taken a little bit of a beating lately. >> i've been mulling this over. it's down $1.29 but it's been a red hot stock. people are going to be mulling about whether this whole rail thing is finish. they've got repricing of cargoes going on. i think between 1.15 an$1.15 an pull the trigger. >> how do you think the $3 billion the the company plans to -- is this an obvious lie? >> it won't affect the stock
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price, because what we want is growth, we don't want buy backs, we don't want more cash. when yahoo! gets some growth and startings taking shares from google, it will be buy, buy, buy time. right now it's bye-bye, not buy. >> this is chance in new jersey, what is it with ford motor corporation, it's been stuck in the 9 $9 to $12 for almost a ye now. >> it's fort d in the united states, and there's the ford from overseas. europe bad, latin-american, bad. bed bath and beyond, norfolk southern, two different kind of businesses. norfolk is going off the rails, bed bad, looking good. >> coming up, bargain shopping?
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retailers have been on the rise, but after perusing the aisles cramer has --. and later, making dough, dominos has been -- find us if it can claim the upper crust of the pizza population, when the ceo breaks some news in cramer's exclusive. just ahead. plus 'tis the season? millions of people around the world will get their hands on the highly anticipated crown jewel of the apple empire. iphone 5, but don't, get ready to though everything you think you know about tech out the window. cramer's looking beyond apple and what he says may surprise
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you. all coming up on "mad money."
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any moment there's stocks that might rally for a week or month or a season before they only go out of style. and then there are the long-term opportunities that we search for all the time here on "mad money." what i call the secular growth stories that have the potential to keep going higher year after year after year. hey, look, this ladder group, it's verified. there are very few of them, but when you find them, they could be serious money makers. these stocks still have expiration dates, everything you buy, you're only going to have to one day, sell, sell, sell.
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however the moves would often last longer than you would ever imagine possible. that's why tonight, i want to talk about a terrific long-term name that some people have been backing away from over the last week and a half. and that name is, five below. simple, five, for all you home gamers. if you remember, five below is the teen oriented discount retailer that came public in the mid of july. it's a very issue of a dollar store theme. except for instead of everything being $1, everybody at five below is $5 or less. the price was $17 back on july 13. and then the stock opened at $26.05. right now five below is trading at $35 giving you a 31% gain
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even if you paid up for it in the after market. stock is trading at 50 times earnings. that's pretty darned expensive, even when you consider that fife below is a superlong-term growth rate. some caution is necessary. but let me first say, when you got in on the five below ipo, feel free to ring the register if you want to. if you bought 5 below in the avenue market, you're not crazy if you want to take some off the table. simply being responsible. there's a reason why this stock has run so much. this is a fabulous long-term story and that story still holds true. i still think that five below, is worth owning. what makes this company so attractive? it's pretty simple. five below has what we're always
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looking for in retail. it's a regional to national growth story, it's putting up new stores at an incredibly rapid pace. this store is a new concept, but right now the store only has 226 locations and all located in the upper eastern quadrant of the united states. in other words this is a company that has a ton of room to expand. management says they could grow to more than 2,000 locations all over america. and they're opening these stories quickly. next year they plan to up the number of stores by 25%. if five below were a baseball game, it would still be in the second inning. by the way, this is the reason the stock is so expensive. money managers see how rapidly the company is expanding, they
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see how much of a run way it has to grow, that makes them willing to pay for this stock. how much could five below get? dollar general has nearly 10,000 stores, it's a $17 billion market cap. dollar tree is worth $10 billi n billion. i can see this being a 4 bill$4 billion dlrto $5 billion compan. however before we get to carried away, it doesn't mean that you need to buy five below, because that would be wrong. you need to be patient. you can afford to wait for a pull back, you can buy into weakness, and believe me, you will get pull backs and that's why i'm featuring it now. one week ago, actually a week and a half, when five below reported it's first quarter out of the box on september 10, the
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way the stock behaved after the quarter, it gave you a terrific game plan for how to trade five below in the future. five below had an 8.6% increase. those numbers fail to beat the higher figures that bullish money managers were whispering to others that they thought could get. five below's management gave conservative -- that's a baseline number that management always seems to plan for. it always seems to do best. what happened when the company expresses caution? this is where your opportunity is going to come in. five below got hit and it got hit hard before quickly rebounding. the company stumbled and gave you a terrific buy opportunity. see, before five below reported the stock was trading $35.38.
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then the day after, the stock opened at $33, sank to a low of $30.25. you had a chance to buy the stock down 10%. now the stock is back at $34.25 barely more than a dollar less than where it -- when you're dealing with momentum, the slightest little issue can cause the share price to get banged down in a major way, giving you this fabulous buying opportunity. here's the bottom line, yes, five below, it's still a terrific regional, the national retail growth store. the fact that it's first quarter is a publicly traded company disappointed some investors is not a reason to back away from the stock. but it is a reason to be smart about how you approach it. there's no reason to chase 5
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below. even as i believe that the long-term gains here could be tremendous. let's go to dan in new york, please, dan. >> jim, i give you a first place stanford football boo-yah from manchester county, new york. >> what's going on? >> i got a question about dollar general, you have always said one of the important factors in investing is what the -- 99.5% of their shares in the past six months and the stock leveled out 14% in that period. am i the only one that's concerned about this? >> you're doing the exact right thing. a lot of this is private equity guys who told you they wanted to get out from day one. it's just now moving into california and it's an absolute great story, i wish i had told you to buy because it turned out
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to be a fabulous opportunity. >> john in maryland, john! >> first of all i have to give you a cardiac philadelphia eagles boo-yah. >> i'm going to give you a very tough, but the shaun is playing against cardinals, 4:00 boo-yah on sunday, a double boo-yah. >> i am totally clueless on the fashion industry, but fnp -- >> fifth and pacific? >> that's one of those you can't run, you can't hide, mohammad ally stocks. i would tell you if you want to play that particular ilk, that while i don't, i clearly did miss the bottom in fnp, i do like jones more. i think jones has more upside and the mojo is back for west card and company. don't forget, obviously we like pf, and a little sleeper by eastern pacific. when a company is new to the
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market, it's key to understand how to chase it. don't chase five below, but get ready for when you get the next price break because it's going to be a regional and national multibreak opportunity. i'll tell you more. coming up, making dough, dominos has been getting a poos of the pie. find out if can claim the upper crust of the ceo population, when the ceo breaks some news in cramer's exclusive, just ahead. and later, 'tis the season? in just dollars, millions of people around the world will get their hands on the highly anticipated crown jewel of the apple empire. iphone 5, but tonight, get ready to throw everything you think you know about tech out the window. cramer's looking beyond apple and what he says may surprise you. all coming up on "mad money."
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is domino's pizza set to deliver good gains to your door? i've been a fan of dominos ever since jan of 2010. it came one an incredible online ordering system.
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thanks to all these changes, this was a terrific stock in 2010. it rallied 20%. dominos was a fabulous stock in 2011. first domino rallied more than $40 in march. then the stock got clocked, falling to less than $30 back in june. since then it's rallied back to 34% and change. just because my daughter and i order from the app. the fundamentals see pretty much sing all ride. dominos has a great business model where 95% of the stores are the franchise. it's got a phenomenal growth story. the overseas business is growing like a weed.
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today i understand the company has some news to announce. so let's check in with patrick doyle, the ceo of domino's pizza mr. doyle-- >> good to see you, so the news, jim, is next thursday. i'm going to be in istanbul and we're going to be cutting the ribbon on our 10,000th store in istanbul turkey. it's one of our fastest growing markets. couldn't be more excited. i think we're the eighth restaurant company in the world to hit the 10,000 store mark. so we're in a pretty unique group. >> so what does that make your foreign and domestic look like. >> we're a lot bigger inside the u.s. and as you go forward the next few years, you're going to see a lot more growth on the international side. and ultimately, i think that's the story for restaurant
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companies and for dominos. you've got 40% of the restaurant business in the u.s. you've got to have that international growth story, that's where most of our growth is going to come from, we have proven it works but we have still got a lot of upside, a lot of room for us to grow in international. >> you have a list of international opportunity. i got to ask you this, because i thought some of these numbers were -- look, they're your numbers, but i got to understand how you get this. we're talking about top ten markets, potential store count, india, right now you have 484. you think you can have 1,000. why do we need 1,000 dominos? india? >> i think ultimately you may even see more upside than that. we're on a pace this year where i think we're going to get around 100 stores open in india, you've got over a billion people. the cash on cash returns of the stores are absolutely phenomenal, we're still getting double digit comps out of that
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market. so i think you're going to continue to see terrific growth in india and ultimately the store count that we can deliver in india is going to be driven by continued economic growth in that market. but we think we can two 1,000 today with the economy where it is, and as it continues the ec better, i think we're going to have more. the middle class is booming, we're doing just incredibly well in turkey. we're at around 250 stores right now. it makes sense for our franchisers to see. the next we'll ask about the france. i don't usually for france as a place to give them a little jingle. i don't think of it as a domino's place. you have 208 and you're taking
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it to 850? >> we absolutely can, i have been in france a couple of times this year. our results are very strong there. french eat a lot of pizza, a lot more than you might think and we're the leaders there. >> the french like jerry lewis, i mean look -- i don't want dominos -- you know i like dominos, you know i was one of the first to get the app. here's what i want to know. dominos is kind of like a cultural chic thing? because the french tend to be a little snobbish, i don't naturally think of them going for the dominos. >> they love it. they love it. we're delivering to their homes, the pizzas there are terrific. >> do you put a big ad campaign in each of these countries, would i see domino's ads during their soccer games where they
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cared passionately about it? >> it's one of those things that really generates growth in a market is you reach the point where you can go on television and the first time you do that when you've got enough stores to make that generated good live for you at a national level. you get a got double digit bump on your comps when you first go on tv. we're already at that point in turkey, we're on television some in france, that generates great growth for us. >> i know you got a franchise model, so the franchisees have to eat a lot of the cost. but i know you're opening in countries that we think are dead in the water. 115 in spain, france, we know france is in trouble. you have higher costs. the people are supposed to be more strapped. are you something that people call up because it's too expensive to go out elsewhere? >> yeah, i think the value proposition that we're giving is why we have continued to see results, particularly in europe,
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spain definitely slowed down, but it's still holding in there okay. we got it pretty hard in greece, but it's small, you got about 30, 35 stores there. the bigger markets are continuing to motor along, and i think it's exactly what you're saying, we give good value for a family of three or four folks compared to other alternatives so we have continued to see very good results around european except for a couple of those southern markets. >> one last question, the united states, i know not as important, but in the most recently, this papa john's is doing well. is that one of those things you look in the mirror and you hear their footsteps or do you just not care because they're so international? >> competition is a wonderful thing, the u.s. is our largest market, it's going to be our largest market for a long time. we're right where we thought we were going to be. we're just under 2% comp growth. and we like to win, we weren't quite there in the first half,
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but you know stay tuned, we're a competitive bunch here. >> all right, look, i think you're going a lot of the right things, i've been behind you, the special dividend knocked the stock back more than i thought it would. people seemed to think the story was over when you paid that dividend, didn't. >> it you're always going to get that offset of $3, that's going to come out of the price when we paid it. our shareholders think we're doing the right thing with cash, we're looking at whether d dividends or buy backs, whether we're going to generate that much cash during the week. >> thank you patrick doyle, president and ceo of domino's pizza. good to see you, sir. >> thanks, jim, appreciate it. >> it's a winner, i like to stick with winners, stay with cramer, stay with dominos. >> coming up, 'tis the season? in just hours, millions of people around the world will get their hands on the highly
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anticipated crowned jewel of the apple empire, iphone 5, but don't, get ready to throw everything you think you know about tech out the window.
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it is time, it's time for the lightning round. are you ready? mike in pennsylvania. mike? >> what's going on, bro, how are you? >> what do you think about som. >> nobody ever got hurt buying chevr chevron. but i can tell you, it seems like it was kind of a tech, exxon is just okay in my book. let's go to robert in texas. >> caller: boo-yah. i got the fire department hooked on watching you.
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we sit around and watch all day and talk about it. >> thank you. >> caller: hey, what do you think about dia zbrksgio probab best. don't forget, they got the captain. let's go to susan in california. >> caller: hi, jim, thank you for taking my call. i was wanting to buy some stock for my grandkids and i was looking at leap, but everyone says go with something like apple. >> i think you should buy print, i think sprint at $5 is the way to go. let's go to betty in north carolina, betty? >> caller: hi, jim, boo-yah. my question is this, what's wrong with duke energy and how should i play it? >> they got that fracus at the
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top, you know, like mr. rogers, not the guy with the sweater vest, but the real can hewna. i'm doing a little house cleaning, i'm a buyer of him. let's go to mark in arizona. mark? >> caller: hey, jim, mark from arizona, formerly of new hope, pennsylvania. >> really man? around the corner from me? >> caller: what is your take on g gun -- ganette. >> let's go to mike in california. >> caller: hov, the stock not the car pool lane what do you think? >> stick with the car pool lane. >> let's go to kenny in washington.
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kenny? >> caller: boo-yah jim from the pacific northwest. >> oh, man, good to have you on the show, pal. >> caller: thanks, man, how do you feel about the fundamental path of conoco phillips? >> i was a little disappointed in the growth there. chevron is cheaper because it has more growth. i want to go to bill in connecticut. >> caller: boo-yah jim. my stock is tenaris, tn. >> you know, tenaris, i'm goi. >> why are you coming in my house and hurt me? why do you do that? why do you do that? i'm going to hate your stock, i'm going to hate on your stock. >> caller: my question is about siri, i'm about to pull the trigger, i think i would rather own siri -- i thought the
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comments about -- the comments about mel -- mel, come on the show and talk about how you saved that company, because you have. but they are putting the cap on the stock because of what's going on with mallone. mel will come on and tell your side of the story because i'm a believer. and that ladies and gentlemen is the conclusion of the lightning round. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech.
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great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here. hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. to compete on the global stage. what we need are people prepared for the careers of our new economy. by 2025 we could have 20 million jobs without enough college graduates to fill them. that's why at devry university, we're teaming up with companies like cisco to help make sure everyone's ready with the know how we need for a new tomorrow. [ male announcer ] make sure america's ready. make sure you're ready. at devry.edu/knowhow. ♪ at devry.edu/knowhow. if we want to improve our schools... ...what should we invest in?
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give me some tech as i wanted to play the annual seasonal technology trade. what's about to play catch up, give me some merchandise, think, think, think. you know, tech stocks, they always trade up at the beginning of the holiday buying season and the end of the year budget flush. they're both countries and governments. these screams for new ideas, they're not working anymore, not on any trading desk anywhere in the world. tech is more treacherous than i have ever seen it. and not because of any potential short fall.
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it's treacherous because it feels like tech as we have known it for years and years is going away. the equipment sector is just one more nail in the coffin of the annual tech love fest. has jersey been the single best part of the tech business come fall. these days nobody wants to own the stock that pump out expensive machines. i would rather make machines that cut spripringles. you can always count on billions and billions sold. less powerful machines to meet the demand from lesser developed countries, there are millions and million of them being sold. but the year over year declines in many cases. plus the acatching generation, they're selling poorly, and if anything, you're going to get
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short falls, not positive earning surprises. some new chip from intel, a new release from microsoft. but have you ever seen less enthusiasm for these new psych snls who cares. our company is making things for the $650 billion that is apple. apple is about the biggest position i have. but i'm not advising trading apple. just owning it. as long as it remains cheaper than the average stock in the s&p 500. the combination of apple's momentum compared to dell and hewlett packard, with nothing to talk about, frankly, but firings is devastating to tech investors. these value trap -- that doesn't
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trade the negative equation. in the old days, there was always semiconductor sets that we were buying. you want amd? good luck. numbers coming down, micron, fool me once, shame on me, fool me twice, how about fool me dozens of times. texas instruments, boosted a dividend, already, but it's also struggling to make the numbers. they sell them to communications, that market has become very spotty. despite the need for more chips for smaller and smaller cell phones which leads us to qualcomm. sirius, the sound chip company has just rallied like crazy, 170% for the year, hardly undiscovered. i actually think qualcomm can be
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bought. still, even if you kept with the apple trade, skyward solutions and apple supplier got hit hard today, because word has it that it doesn't have enough context in the iphone 5. apple doesn't use them? all you're doing is playing a moment supply demand in balances for those companies. now working stocks like cisco, i'm hearing price wars galore in that business. no thanks. that leaves a couple investable. emc subsidiary of bmw, the endless demand, people buy google, apple, amazon, net flicks, but those stocks at $5 they're not cheap. internet itself does present some opportunities, google isn't expensive, it's got plenty of
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run way. particularly because of the failure of others in the space. yelp, astronomical valuation. i don't like trying to catch the bottom or the balance. oddly enough that leaves facebook of all things. kind of an interesting idea, i'm told the new ad is doing quite well. if that's the case then the big supply of stock coming out of lockup down the pike. i actually think facebook is worth owning. and given that the stock is still down, and the company's now finally addressing it's mobile weakness. and i can see real action, sap, ibm, because their clients seem to be relying on them to save money in tough times. you put it all together and you're stuck with a tech group that doesn't have enough players to buy or have been already exploited or have players like apple, which is just destroying every company in its path. here's the bottom line, all the
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leaves are brown and the sky is gray. the ones that could move already have, my advice, if you haven't bought in tech lately, just wait, the seasonal trade, it's already over. in fact it never began. everyone in the nicu, all the nurses wanted to watch him when he was there 118 days.
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to believe in howard schultz or not to believe in it.
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schultz the ceo of starbucks introduces it's new espresso machine. the company not just the stock. which we know has been a bit of a disappointment, up 10% for the year, not too shabby, but down 12 points from its old high. first the coffee maker entry, while it's important, there's no coffee more than green mountain coming. the single serve brewer and starbucks partner. there's a glimpse of optimism. third while on the quiet period, you can't talk about how the quarter's going. how about the slowdown sales that came to this country. now i know there's plenty of skeptics about star bruk bucks. i think he makes great points, to me it looks like we have a
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frenemy situation. i do want to own starbucks. and i'll tell you why. lots of instant cat calls of my positive view of schultz on twitter. he made you fortune. he's been like steve jobs in a way and i don't use that analog lightly. hey, listen, they have disappointed us, but howard schultz? i trust him. he made it clear that the u.s. come back would be gradual, it will be long in the making, but it will happen. i'm going with schultz not against him, because it has been a horrendous bet. i think it will be a horrendous bet once again. whether it be the versatile, the rebound in traffic at home or
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