APPLE ON THE REBOUND

Back in January I discussed the slip in Apple share price.  Even though the price had experienced a sharp decline from a record high of $705.07 down below $500 I still felt the company had plenty of potential. 
As a follow-up to that post, here is the latest assessment of Apple by Ian Wyatt, Chief Investment Strategist for Wyatt Investment Research.

After billionaire investor Carl Icahn announced a stake in Apple (AAPL), shares jumped nearly 5%. The 77-year old activist investor announced his position on Twitter two days ago: "We currently have a large position in Apple. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come."

The Wall Street Journal reported that he's been building his $1.5 billion stake in Apple over the last month. What's his outlook? Icahn says, "Even without earnings growth, we think it ought to be worth $625." He's recommending that CEO Tim Cook increase the record $60 billion share buyback program. Doing so would decrease the number of Apple shares, and raise the EPS.

This is just the latest news that helped lift Apple shares by more than 100 points. The stock is now up around 27% since its July lows of $393, marking a big comeback for the tech giant. I've been bullish on Apple shares. In "The Truth About Apple," I told readers:

Like all big tech companies, Apple has matured. The idea that innovation at Apple died with Jobs doesn't sit well with me. While Apple will continue to innovate and create new products, it doesn't really matter. Because Apple's stock price reflects a stale business that will never grow again.
In that June 18 article, I advised readers to buy Apple stock. Here's exactly what I said:
Value and income investors alike should love the stock, thanks to the shareholder-friendly initiatives and the cheap stock price.

At $432, now is the perfect time to buy Apple shares. The stock is cheap, with a P/E just north of 10. The company's growth is superior to most companies of its size. And the balance sheet is pristine, with more cash than many countries.

Apple may not have the high dividend yield that most income investors seek. But you should be attracted to the growing dividend, huge share buyback program and the cheap stock.

I've personally owned Apple shares since 2010. The decline of Apple shares from $700 to less than $400 was painful. But like many Apple shareholders, I kept every one of my shares. In fact, I even violated a crucial investing rule: Don't try to catch a falling knife. Even as Apple shares plunged, I bought a little more stock in January at $508 and February at $459. Averaging down can be a mistake, but it occasionally creates big profits.

Just eight days after telling readers to buy Apple shares, I made a big move. I doubled-down on Apple in late June, and bought a sizable position at $398. Those shares are now up 25% in less than two months. Why did I buy Apple at that time? The reason is simple. I looked at Apple and saw value. The stock was trading at just 10x earnings. That's cheap for any company. And when you get a chance to buy a great company at a bargain price, you snap it up.

Plus, I'm an Apple customer who loves the products. My iPhone, MacBook, iPad, and iTunes are all intertwined in the Apple ecosystem. Like millions around the world, I'm a customer for life. That's why, when I saw Apple briefly dip below $400, I pulled the trigger. At the time, there was rampant pessimism. And that can be a sign of a bottom.

Apple shares are now up considerably. But the stock is still cheap. On an enterprise value basis -- which removes the value of the company's cash -- shares trade at a multiple of just 9x this year's earnings estimates. That's a 45% discount to the S&P 500.

My view on Apple hasn’t changed: "Apple is truly a unique opportunity to buy a world-class company at a very reasonable price. With the stock market near all-time highs, Apple certainly appears attractive. Especially when you consider the potential for substantial gains if the company unveils another device that changes the world..."

If you're looking for value in this rising stock market, look no further. You've found a great bargain in Apple shares. That's why Carl Icahn is buying Apple shares. I hope you've done the same.
The original article by Ian Wyatt can be found at http://www.wyattresearch.com/article/apple-going-to-625/30179

IS HALLIBURTON A BUY?

Halliburton (HAL) has had a rocky time in the public relations department ever since the 2010 Gulf of Mexico oil spill but that doesn’t seem to have rankled investors too much even with the latest revelation that the company destroyed evidence related to the Deepwater Horizon explosion and subsequent oil spill.

WHO IS HALLIBURTON

Halliburton is one of the world’s largest providers of products and services to the energy industry.  The company serves the upstream oil and gas industry from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

DESTRUCTION OF EVIDENCE

Thursday July 25th, the Justice Department announced that Halliburton has agreed to plead guilty to destruction of critical evidence after the Gulf of Mexico oil spill in 2010.  The oil services company said it would pay the maximum allowable fine of $200,000 and will be subject to three years of probation.

The Justice Department said Halliburton had recommended to BP, the British oil company, before the drilling that the well include 21 metal centralizing collars to stabilize the cementing. BP chose to use six instead. During an internal probe after the accident, Halliburton ordered workers to destroy computer simulations that showed little difference between using six and 21 collars, the government said, after which the company continued to say that BP was neglectful to not follow its advice.

While Halliburton’s stock dipped slightly following Thursday’s announcement, it surged nearly $2.00 in early trading on Friday.  This might signal investors willingness to overlook the company’s indiscretions in favor of profits.

2013 QE2

On July 22 Halliburton released their second quarter 2013 earnings information.

Income from continuing operations for the second quarter of 2013 was $677 million, or $0.73 per diluted share. This compares to income from continuing operations for the first quarter of 2013 of $624 million, or $0.67 per diluted share, excluding a $637 million charge, after-tax, or $0.68 per diluted share, to increase a reserve related to the Macondo litigation.

Halliburton's total revenue in the second quarter of 2013 was a company record of $7.3 billion, compared to $7.0 billion in the first quarter of 2013. Operating income was $1.0 billion in the second quarter of 2013, compared to operating income of $902 million in the first quarter of 2013, adjusted for the Macondo charge. For the first quarter of 2013, reported loss from continuing operations was $13 million, or $0.01 per diluted share, and reported operating loss was $98 million.

“I am pleased with our second quarter results, as total company revenue of $7.3 billion was a record quarter for Halliburton,” commented Dave Lesar, chairman, president and chief executive officer.

FUTURE OUTLOOK

“For the third quarter, we anticipate the U.S. land rig count to be flat. We are observing a continuing trend towards multi-well pad activity among our customer base, which we believe will result in higher service intensity. Ultimately, we believe this efficiency trend bodes very well for us, as our scale and expertise allows us to lead the industry in executing factory-type operations. We also expect North America margins to continue to expand over the balance of the year.  We continue to be optimistic about Halliburton’s performance for the remainder of 2013, our ability to continue growing our North America margins, and continued revenue and margin expansion in our international business. We are relentlessly focused on delivering best-in-class returns. Our recent quarterly dividend increase, aggressive stock repurchases, and our $5 billion stock repurchase authorization reflect our growing confidence in the strength of our business outlook,” concluded Lesar.