Tuesday March 16, 2021: $125.57 +$1.58 +1.27%

[Dave]

Good morning. We have green again in the pre-market at +$0.91 at the moment. Perhaps we can have another positive day and start the breakout to higher levels. The air down here don’t smell so good.

Deutsche Bank Remains Bullish on Apple Stock; Sees 30% Upside

A recent dbDIG survey indicates that since the pandemic’s onset, the iPhone’s share of the US installed base and length of smartphone ownership has “remained relatively consistent.”

The iPhone’s cut of the market share remains just below 50%, whilst over the past 2 years, roughly 75% of smartphone users have purchased a new phone.

“The launch of 5G smartphones does not seem to have significantly changed the length of smartphone ownership (both iPhone and other),” Ho said, “Although we do expect the refresh cycle to accelerate when 5G infrastructure is more built out.”

When looking to make a smartphone purchase, 57% of iPhone users intend to get the latest model, just below the 59% who planned to do so in Dec 2019. Storage wise, less are inclined to get 512 GB models – the highest amount available - although 64 GB appears insufficient to most. Since Dec 2019, consumers buying 64GB models have dropped from 18% to 8%, while in the same period, those purchasing 128 GB models grew from 12% to 24%.

Elsewhere in the Apple ecosystem, the talk of an Apple Car does not seem to be drawing much enthusiasm; only 33% of those surveyed expressed an interest in an Apple auto offering, while considering the tech giant’s lack of experience with car design, 68% said they were unlikely to purchase a first-generation model.

dbDIG has also been gathering geolocation data, which shows that Apple’s U.S. store traffic is on the rise.

“While store traffic bottomed out in the spring of 2020,” Ho noted, “It has improved since and is now at about 40-50% of the volume seen pre-pandemic.”

Given all of the above, Ho stays with the bulls. The 5-star analyst rates Apple shares a Buy along with a $160 price target. Should Ho’s thesis play out, investors are looking at upside of ~30% over the next 12 months.

All in all, most on the Street are backing Apple’s continued success; Based on 19 Buys vs. 5 Holds and 2 Sells, the analyst consensus rates the stock a Moderate Buy. The 12-month forecast is for gains of 21%, given the average price target currently stands at $150.25.

[Dave]

Two Tech Stocks To Watch As Biden Pours Trillions Into The Green Economy

We've already seen major gains throughout 2020 across the EV industry.

The electric van and bus company, Workhorse, saw shares jump for extraordinary 551% gains in 2020.

Tesla soared 740% on its way to becoming one of the most valuable stocks on the market.

And electric charging company, Blink Charging, saw eye-popping gains of 1,740% last year.

The surge in interest for EVs is unprecedented, and it’s paid off big for the companies making bold, innovative moves in the industry.

But now, as Biden takes office and gets prepared to unleash a $2 trillion boom...

Investors are looking to companies in industries related to electric vehicles.

Here are two EV related companies we believe could win in 2021:

1 - Facedrive (TSXV:FD,OTC:FDVRF)

Facedrive (TSXV:FD,OTC:FDVRF) has seen success already over the last year. But recent news shows things may be just starting to heat up for this green company from Canada.

Late last year, they acquired the EV subscription company, Steer, buying it from the largest clean energy producer in the United States.

Steer’s subscription model has the potential to flip the traditional car ownership model on its head.

Using this innovative new service, subscribers can rent an EV whenever they need it - and at a tiny fraction of the price it would cost to buy one outright.


They simply pay a modest monthly fee like with Netflix, and they get access to their choice of EVs from a fleet at their disposal.

2 - Arrival

Arrival, the exciting new electric vehicle company, is zigging while the rest of their competitors zag.

Rather than focus on sedans like Tesla, Arrival is developing the latest electric vans and buses for commercial delivery.

And they hold one major advantage over their gas-guzzling competitors.

Because they're able to produce these vehicles at a similar price compared to those with internal combustion engines...

And because it's cheaper to power your vehicle on electricity rather than gasoline...

Customers are able to pay a comparable price on the front-end while saving money on the back-end.

And they've already got some big names on board.

They recently signed a deal with UPS to supply the shipping giant with 10,000 of its delivery vans.

And smart money both inside and outside the auto industry is pouring in cash.

Hyundai and Kia have invested $111 million into the EV company.

Blackrock, the world’s largest global investment management corporation, invested another $118 million last fall.

And CNBC's Jim Cramer even says Arrival is the EV company with the best chance to be "the son of Tesla."

At the moment, Arrival is still a private company...

But that’s expected to change in the weeks ahead, as they're set to go public via a merger with a “blank check company” or a SPAC.

CIIG Merger Company (NASDAQ: CIIC) announced they plan to merge with Arrival, and their shares jumped over 30% in the month of December.

But as they’re expected to make their merger final by the end of March, it could prove to be another significant catalyst for the company.

Apple (NASDAQ:AAPL) is already a leader in Big Tech’s sustainability push…but it’s more than just that. From the products themselves, to the packages they came in, and even the data centers powering them, Apple has gone above and beyond to cut the environmental impact.

But now, it’s even getting into the transportation business. "We're focusing on autonomous systems. It's a core technology that we view as very important. We sort of see it as the mother of all AI projects. It's probably one of the most difficult AI projects actually to work on." Apple CEO Tim Cook on Apple's plans in the car space. Electric vehicles aren’t likely to be left out, either…

Apple's rumored car design means that more active material can be packed inside the battery, giving the car a potentially longer range. Apple is also examining a chemistry for the battery called LFP, or lithium iron phosphate which is inherently less likely to overheat and is thus safer than other types of lithium-ion batteries.

I could see the Apple Car following Facedrive’s subscription model. Interesting.

[Dave]

Jump, by Apple (video)

Another inspired AirPods ad, this one for the Pro. Half a million views on day one.

From the comments section:

Dan Pallotta said:

I can’t do any of that with my AirPods. Is it something I have to adjust in settings?

[chinacat]

AppleInsider has iPhone 12 5G speeds lag behind Android rivals, report says.

9TO5Mac has Foxconn to voile electric vehicles in North America by 2023, but calls Apple Car deal ‘still a rumor’.

[macster]

Very encouraging
PED has this......Evercore raises its Apple target $12 to $175

From a 126 page (!) note by Amit Daryanani that landed on my desktop Tuesday.


www.ped30.com/2021/03/16/apple-evercore-target-175/

[4aapl]

Mar 16, 2021 2:19:34 GMT -8 Dave said:

Jump, by Apple (video)

Another inspired AirPods ad, this one for the Pro. Half a million views on day one.

Nice. (EDIT: though IMO not really at the level of past "moving" Apple commercials, but maybe it will be once trimmed down to TV spot lengths)

I saw the Sauce one last night while streaming off of cbs.com. Pushing the limits on warrantability IMO, but kinda fun.

www.youtube.com/watch?v=SCQpOaR3sVo

And then that went on to the two "Underdog" mini shows. Not really what I'd expect from Apple, even if it was a bit truthful and funny, with some Apple bits pushed in. But more like an Office or IT Crowd episode.

I was liking that $127 level. Still, good to have a bit more volume, and it looks like it will pass 100 mil today, which it hasn't the past 2 trading days.

[archibaldtuttle]

Two up days in a row. Good!

[4aapl]

Mar 16, 2021 12:25:27 GMT -8 archibaldtuttle said:

Two up days in a row. Good!

And volume just over average!

I'd like to be cautiously optimistic, but for sanities sake for now I'll just expect that we're not out of this funk yet. It will get out of this at some point, and it would be pleasant to see the stock manage it now instead of waiting until a couple weeks before earnings.

[Dave]

Mar 16, 2021 6:35:21 GMT -8 macster said:

Very encouraging
PED has this......Evercore raises its Apple target $12 to $175

From a 126 page (!) note by Amit Daryanani that landed on my desktop Tuesday.


www.ped30.com/2021/03/16/apple-evercore-target-175/

From the comments section from your link:

Romeo A Esparrago Jr said:

Some day…HomePods will be in Figure 25. Some day!! Sigh…

[Dave]

IDC: Apple rules global wearables market with 36% share

“2020 was the year that hearables became the must-have device,” said Ramon T. Llamas, research director for IDC’s Wearables Team. “Hearables provided a new degree of privacy, particularly during home quarantine but also while out in public. Meeting that demand was a long list of vendors with an equally long list of devices, spanning the range of feature sets and price points. Underpinning the hearables market was a constantly shifting competitive landscape, with companies slowly gaining a foothold in the market (Amazon and its Echo Buds and Frames), vendors introducing new form factors (Apple and AirPods Max), and new features making their way down the price curve, including automatic noise cancelling and voice assistant capability.”

Apple led the market once again with 36.2% share of 4Q20 shipments. Its Watch shipments rose 45.6% thanks to the appeal of three models with different price points (Series 6, Watch SE, Series 3). Hearables shipments also surged during the quarter although year-over-year growth slowed to 22%, down from 28% and 29% in the previous two quarters. The slowing growth reflect the huge amount of adoption that the market has seen in recent quarters.

My take: A good market to rule and a good time to rule it.

Cue the charts

I like the charts.

“Hearables”?

[mark]

I've been trying to puzzle out a tax problem ... without success yet. Part of the problem is that it depends on multiple conjectures regarding the future. The essence of the question is when does it become advantageous to purposely take a huge capital gain at a lower tax rate in anticipation of higher tax rates. The calculation itself is relatively easy, though interest rates and time probably have to be accounted for somehow. Just as an example, if one could take a very large capital gain now (say in 2021) while paying capital gains at a tax rate of 23.8% versus paying a minimum capital gains tax rate of 43.6% (say 2022-24) or even higher at 48.8% (say 2025 and later)? Now add to that the fact that sometime later, perhaps 2029 or 2033, capital gains tax rates may come down a bit (though not likely all the way down to 23.8%).

(This is not, repeat NOT, a political discussion, it is simply a discussion mostly about arithmetic. If anyone wants to have the associated political discussion, it can be done in the dungeon area.)

[4aapl]

Mar 16, 2021 14:55:07 GMT -8 mark said:

I've been trying to puzzle out a tax problem ... without success yet. Part of the problem is that it depends on multiple conjectures regarding the future. The essence of the question is when does it become advantageous to purposely take a huge capital gain at a lower tax rate in anticipation of higher tax rates. The calculation itself is relatively easy, though interest rates and time probably have to be accounted for somehow. Just as an example, if one could take a very large capital gain now (say in 2021) while paying capital gains at a tax rate of 23.8% versus paying a minimum capital gains tax rate of 43.6% (say 2022-24) or even higher at 48.8% (say 2025 and later)? Now add to that the fact that sometime later, perhaps 2029 or 2033, capital gains tax rates may come down a bit (though not likely all the way down to 23.8%).

(This is not, repeat NOT, a political discussion, it is simply a discussion mostly about arithmetic. If anyone wants to have the associated political discussion, it can be done in the dungeon area.)

I did this maybe 8 months ago, and posted about it. Breakeven was something like 6 years out. I made the assumption that I would be putting the money, sans amount for taxes, back into the same investments, or rather getting the same returns.

Run it for a few calculations at different rates of return. Maybe I used 20% this year, 15% next, and 12% after. And then also tried it at lower rates.

Taxes shouldn't run the show, but they do play a part, just as AAPL's relative peaks and valley do too. If AAPL looks high later this year, and tax rates look to jump in future years, I might very well sell 10-50% of my profits, for the quadruple reason of timing, taxes, getting rid of margin, and diversification. All have pluses and minuses, and their interpretation varies with your personal goals, timeframes, and risk tolerances.



(EDIT: It was at the end of Oct. Breakeven was ~5.5 years out, using 2 years at 20% gains, 12% after, 23.8% tax currently, 39.6% in the future, and with a current basis roughly 1/3 of the current value. I'll see if I can sanitize it a little and post it, though it's currently a .numbers spreadsheet.)

[4aapl]

Changing the future tax rate to 43.6%, and using 23.8% for the current, puts the breakeven at about 7 years. But at 5 years out, the net total is only 3%. If planning on selling some, or a lot, in the next few years, then an upcoming significant tax change should make one consider making the sales early.

I did this with some shares last year, locking in LTCG, and then buying most of them back. This was only something on the order of 10% of my gains. For me this was a compromise between a lot of things, but will make it easier in the future if I decide to sell some shares in order to bring down margin or change my investments. It will help ensure that I am not entirely held back from what I should do, due to a fear of being non-optimized at that time due to taxes.

Paying taxes upfront, even at the much lower rate, does eventually loose out. But really while it works out to big numbers when using big numbers, it doesn't make for a 10% underperformance until 16 years out. And it's just a 16% underperformance 45 years out, by paying all of the taxes this year instead of holding on to all of the gains for the next 45 years.

Like we've always heard, don't let the taxes wag the dog. I'd rather have 1.2T than "just" 1.0T, but really it's just 16%, and there's probably much more important ways that I could optimize things over roughly the next half-century.

Attached is my fairly simple spreadsheet, both in numbers and excel format, going out 45 years. The calculations are based off the 6 highlighted fields, with initial portfolio value, basis, current tax rate, future tax rate, rate of return for the first 2 years, and future rate of return.

(EDIT: Like many wall of worry items, remember that this is the "worst case scenario". It does not take into account the varying tax brackets. For instance, even if someone sold $2M of gains after rates were moved higher, the current tossed about plan is that only the part above $1M would be at the higher rate. Similarly, now LTCGs are taxed at 15%, 18.8%, and 23.8%, along with some at 0%. Taking that into account, for a $2M gain taken all in one year, you might be comparing 20% rates to 30% rates (instead of 23.8% to 43.6%). Play with the numbers, and add to it if you want. For me, this was just to get things into the right ballpark and right mindset.

And that turns out to be that if I make a big change in the next few years, then front loading the taxes can make a big difference. Conversely, if I hold for decades more, that can make a big difference. But in the middle ground, say 4-20 years, the difference between the two paths is much smaller, especially when looking at the net total tax rates instead of the absolute highest tax brackets.

It's on the wall of worry, but it's less of an issue than some other things)

Attachments:

tax rate comparison copy.numbers (138.58 KB)

tax rate comparison.xlsx (11.74 KB)