December is upon us, and stocks are off to a great start. Strength on the first day of the month followed solid returns produced in November.
Apple has been riding the ta ilwinds as well. The stock traded ahead of the S&P 500 and the Nasdaq indices by quite a bit through the Tuesday trading session. Probably helping to explain bullishness is good news on holiday sales projections.
Cyber Monday uplift
Data from Adobe Analytics has confirmed what was already expected: this has been the year of e-commerce. Cyber Monday spending increased 15% over 2019 levels, with curbside pickup – a fairly new way to shop – rising 30%. Adobe estimates that online sales in the current holiday season will grow year-over-year by 30% to $184 billion, substantially more than what one should expect of consumer spending in general.
It is clear to me that these numbers favor companies like Apple. This is the case because the iPhone maker has a strong digital channel, as proved during a challenging fiscal third quarter that saw physical stores close their doors due to the pandemic.
For what it’s worth, other e-commerce powerhouses will likely benefit from holiday season trends as well. For example, expect Amazon, Walmart, and companies with strong DTC (direct to consumer) channels like Nike and Lululemon to also thrive in the fourth quarter.
Jim Cramer on Apple
Apple was also a topic on conversation on Jim Cramer’s Morning Bell. His favorite strategy has been to “stick with the winners” rather than to rotate into cyclical stocks.
I will admit that I have been less bullish on Apple in the short term than Jim Cramer seems to be. I would certainly hold Apple for the long run. However, I lean towards believing that 2021, the likely year of pandemic and economic recoveries, will be more favorable to value and small cap stocks than to mega-cap tech names and stay-at-home beneficiaries.
But here is one of Jim’s quotes that I found pertinent, and that I fully agree with:
“I just want to see a return to non-speculative stocks. I’m a believer that discipline trumps conviction.”
Yes, one can bet on Apple’s holiday season being a strong one, as much as one can wager on the “hot stock of the day”. But I agree that discipline is what will produce superior returns in the long run.
This being the case, I continue to think that investing in high-quality companies with rock-solid balance sheets, strong brand recognition and unwavering customer loyalty will likely prove to be a good idea.
So, as Jim Cramer has stated, having the discipline to stay with a secular winner like Apple might make more sense over time than trying to anticipate the right moments to hop in and out of certain stocks.
Read more from the Apple Maven:
What To Expect of Apple Stock Through The End of 2020
Highlights of Apple’s Black Friday Week
(Disclaimers: the author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)