Since the first of the year, the stock market has increased more than 5 percent and investors’ moods appear bullish.
According to market watchers, when the Dow Jones transportation and industrials averages reach significant highs, the trend is bullish and higher stocks result. Since the lows of November, the transports have shot straight up.
The Dow transportation average recently hit at an all-time high (5,859.84) and the Dow industrials are at their highest level since 2008 (13,874.85), reflecting positive economic activity in the country and another reason for the increased prices in the market.
Historically, investors have done well owning stocks when the industrial and transportation averages reach new highs.
Investors’ moods have changed greatly since legislators averted the “fiscal cliff,” giving way to greater confidence and financial opportunity.
Financial experts recommend that if investors are in the market for the long haul, then they should continue to hold 90-95 percent of their portfolios in stocks and the remainder in short-term bond funds.
Two Town Crier “50” stocks made headlines last week.
• Apple Inc. (AAPL; $450.70) reported October-December earnings last week, which were flat compared with the year before. Sales grew 18 percent from the previous year, but the production lines of the iPhone5 and the iPad Mini held back profits.
CEO Tim Cook deemed Apple’s results “extraordinary,” but on several key measures the company grew less than analysts predicted. That disappointment triggered a sell-off that took the stock from the all-time high of $705 four months ago, when the company released the iPhone5.
Analysts didn’t panic as much as some brokerage houses. Numerous brokerage houses cut the price target on the stock of the world’s largest publicly traded company by $132, to under $500.
Apple projected fiscal 2013 second-quarter revenue to total between $41 billion and $43 billion, and gross margin between 37.5 percent and 38.5 percent. Those figures don’t take into account Apple’s enormous cash pile of $121 billion, which makes the stock value look better.
Numerous analysts still rate Apple stock both a current and long-term buy.
• Google Inc. (GOOG: $751.44) shares surged after the company announced that its December-quarter profit rose 13 percent to $10.65, topping the consensus estimate. Revenue soared 36 percent to $14.42 billion, approximately $2 billion ahead of projections.
The company’s better-than-expected results sparked a rush of stock-price upgrades, with analysts predicting that Google’s mobile advertisement business would boost revenue in the long term.
Several financial outlets reported that 12 brokerage houses raised their price targets on Google’s stock from $775 to $828. On average, analysts are boosting Google’s price target by $40.
Cantor Fitzgerald’s analyst reported elevating Google’s price target to $900. The reasoning: “Fourth-quarter results highlight very healthy performances in both search and display as one of the best global plays on secular growth in online advertising and e-commerce.”