Over the last month, the S&P is up about 8%. Apple (AAPL) is up 6% and Google (GOOG) is flat. Even with a jump of 1% to 2% after hours, Starbucks (SBUX) shares may be up 3% for the 30 day period. They are still well below their 52-week high.
What happened? Spectacular expectations. Google’s revenue rose well over 70%. Apple not only had EPS of $.87 compared to some Wall St. estimates of $.67. It is also beginning to show strong growth of its Mac computers and is now taking share from PCs.
Starbucks revenue rose 20% in the quarter just reported. The company guided to growth remaining at this rate though-out the year. Starbucks opened 560 stores in the quarter to hit 13,728.
But, Starbucks has also said that it will have 40,000 stores eventually. Just as the market expects the Apple iPhone to be a huge success, and Google to keep its 50% share of the search market.
In short, there is almost nothing that these companies can do to impress Wall St. enough to get a big rise out of their share prices. That makes it tough on current holders.
Over the last five years, Apple’s shares are up about 700%, followed by Google’s at nearly 400% and Starbucks at 200%. But, year-to-date, only Apple has outperformed the S&P and not by much. Even Ebay is up by about the same amount.
Shareholders in the three stocks could be facing a period where forecasts and price targets for the company’s are so high that they can do nothing to move their share prices other than disappoint.
And, that is hard to swallow.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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