A Chart That Will Surprise You

Here is a chart of four stocks…..I’ll bet a whole lot the results will surprise you..

First, here is the cart:

Surprised? Would anyone have bet shareholders of Google (GOOG), Research in Motion (RIMM) and Apple (AAPL) are essentially in the same boat in the past year as shareholders of Sears Holdings (SHLD)? Or, based on the love affair or lack thereof with their products, is our outlook of the various stocks skewed?

One is a struggling retailer about the kick short sellers in the face and the others are tech companies that sell products we all love. The problem with them is the same old story. Investors bought shares of them at 30-50 times earnings (or higher) assuming the explosive growth they were experiencing would go on forever. The growth subsided, shares plummeted and investor got squashed.

Are they cheap now? One could argue they are reasonable although the same person might wonder how many $200-$400 phones people may buy in a recession or how much money companies are going to put into advertising in one. If they won’t, prices could fall further. I don’t know either way but I do know I would feel more comfortable owning then at 12-17 times earnings they trade at now than the ridiculous levels earlier this year.

Do people love their products still? Yes. Are they still very profitable? Yes. Is overpaying for unsustainable growth a recipe for losses? Yes.

Disclosure (“none” means no position):Long SHLD, none
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