Diamonds and Dogs

11/18/15

Apple (AAPL) flexed its muscle today leading the Dow, the Nasdaq, and the S&P 500 higher thanks to an upgrade from Goldman Sach. Apple rose 3% after Goldman said the stock could see a 43 percent rise over the next 12 months as investors shift their focus from iPhones sales to the fees collected for services the company provides. Goldman added Apple to their "conviction buy list" with a $163 target saying the stock trades like a "hardware stock" at an 11 times price-to-earnings ratio (P/E), but with the company introducing services such as Apple Music, it will become more akin to Google or Facebook. That was music to investors' ears.

Not all chips are trading higher. Intel has led a nice rebound in the chips of late, but Qualcomm (QCOM) is the dog of the day and a dog all year long. The chip company that specializes in developing, manufacturing, and marking digital communications products in the US, Korea, China, and other international markets has seen weak sales all year long. Now adding fuel to the fire, Qualcomm dropped 9% to a new 52 week low after the South Korea's Fair Trade Commission has sent a examiner's report to Qualcomm claiming that the company does not properly negotiate aspects of its licenses and that they improperly maintain chip and intellectual property licenses. Qualcomm responded saying the allegations are due to a misapplication of law and unsupported facts. If Qualcomm is right, the stock looks attractive trading for 10 times earnings.