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JPMorgan Apple Slideshow

JPMorgan Apple Slideshow

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Published by: Forbes on Feb 24, 2012
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US Equity Strategy FLASH
Too Early to Fade on AAPL. A Cyclical Sector unto Itself and Still Underowned
Portfolio Strategy
Thomas J. Lee, CFA
AC
(1-212) 622-6505
thomas.lee@jpmorgan.com 
Bloomberg JPMA TLEE<GO>J.P. Morgan Securities LLC
Daniel M. McElligott
(1-212) 622-5598
daniel.m.mcelligott@jpmorgan.com 
J.P. Morgan Securities LLC
Katherine C. Khor
(1-212) 622-0934
katherine.khor@jpmorgan.com 
J.P. Morgan Securities LLC
See the end pages of this presentation for analyst certification and important disclosures, including non-US analyst disclosures.
 J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm mayhave a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making theirinvestment decision.
North America Equity Research
February 24, 2012
IT Hardware
Mark Moskowitz
AC
 
(1-415) 315-6704
mark.a.moskowitz@jpmorgan.com 
J.P. Morgan Securities LLC
Anthony Luscri
(1-415) 315-6702
anthony.s.luscri@jpmorgan.com 
J.P. Morgan Securities LLC
Mike Kim
(1-415) 315-6755
mike.j.kim@jpmorgan.com 
J.P. Morgan Securities LLC
 
2
Overview: Given upturn in global growth, Cyclicals are leading
Apple Focus #1: A Sector unto itself
Apple Focus #2: Top 10 driver of earnings…
 
Apple Focus #3: Superior comparative fundamentals
Apple Focus #4: Still underowned
Apple Focus #5: Reaching "fair value" implies 30pts of S&P 500 upside, or half of points gain to YE
16 Technology Stock Ideas Highly Correlated with Apple
Fundamental case for Apple: Still Catalysts: Mark Moskowitz
Outline
 
3
Overview: Given upturn in global growth, Cyclicals are leading
Cyclicals and Near-Cyclicals have been the leaders in the market over the past five months, outperforming as the macroenvironment has improved. Since early October, when the S&P 500 troughed at 1099, global growth prospects improved: (i)the US labor and housing markets have improved; (ii) the risk of a tail event in Europe has diminished; and (iii) China is movingto easing.
Note outperformance of Cyclicals below with 530bp since October’s low and 330bp YTD.
 
The best performing Sectors within this have been
Financials
and
Technology
.
RankSecto AbsolutePerf RelativePerf 
S&P 50023.9%
Cyclicals29.2%5.3%
1Materials32.2%8.3%2Industrials31.4%7.5%3Technology26.6%2.7%4Discretionary26.5%2.6%
Near-Cyclicals30.8%6.9%
1Financials30.9%7.0%2Energy30.7%6.8%
Defensives10.5%-13.4%
1HealthCare16.7%-7.2%2Staples11.8%-12.2%3Telecom7.6%-16.4%4Utilities5.9%-18.0%
RankSecto AbsolutePerf RelativePerf 
S&P 5008.3%
Cyclicals11.6%3.3%
1Technology14.1%5.8%2Materials12.2%3.9%3Industrials10.1%1.8%4Discretionary9.7%1.4%
Near-Cyclicals10.4%2.1%
1Financials13.4%5.1%2Energy7.5%-0.9%
Defensives0.0%-8.3%
1HealthCare3.4%-4.9%2Staples0.7%-7.7%3Telecom-0.7%-9.1%4Utilities-3.4%-11.8%
Relative Price Performance of S&P 500 Sectors
 
% chg
 
Source: J.P. Morgan and FactSet
 
Technology andFinancials havebeen the clear leaders YTD.Cyclicals andNear-Cyclicalshave been theclear leaderssince the October low, as macroconditions have
strengthened
over the past fivemonths.
Since October low
 
2012 YTD

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