5 Stocks I’m Following on My Phone and Why

5 Stocks I'm Following on my Phone and Why

These are a few of the stocks I’ve been following on my phone lately: AAPL, DIS, LC, IRM and TSLA.

Apple (AAPL):

Apple is impressive not just because of its market prowess, but also because of how the company treats investors with its relatively low P/E ratio and a dividend of around 2%. If you don’t believe me, it should make things easier knowing that the “Oracle of Omaha”, Warren Buffett, has Apple as his 2nd largest Berkshire Hathaway holding.

Apple is also on the cusp of becoming a trillion dollar company in terms of valuation. A couple of things that could help this happen relatively soon are a planned dividend increase and a share buyback. Both of these are driven by Apple’s 2018 repatriation of around $200 billion in capital it was holding overseas.

From an operations perspective, Apple is an interesting trifecta of “subscription”, hardware and software.

Mostly, Apple is a hardware subscription business. It sells iPhones and other devices that have an estimated useful life… Usually around 2-3 years. This means that as long as Apple keeps customers happy with great quality and other add on services, people should keep buying new devices year after year. Boom. Subscription business.

Apple rakes in about 87% of the entire smartphone market profits. By contrast, Samsung, Apple’s main competitor in smartphone sales, earns 10% of smartphone market profits.

This is expected to continue to occur.

Because the new iPhone X form factor will lead to a multi-year supercycle of upgrades from older phones. The upgrades to the newer edge-to-edge designs are expected to boost the average selling price (ASP) of each iPhone.

While Apple sells premium priced luxury tech products, one of its fastest growing segments is refurbished iPhones sold under Apple warranty. This market grew 13% last year, in contrast to a shrinking overall smartphone market.

Also, Apple has been very successful in deploying its software and services businesses. Indeed, most people don’t realize that Apple’s services business generated more revenue than all of Facebook in 2016.1 The company’s various subscription services include iCloud, Apple Music and iTunes.

As of yesterday, Apple announced Apple Music has around 38 million subscribers, even after launching only in 2015. However, there is a lot of room to grow. Apple has around 1.3 billion devices on the market and 800 million credit cards stored in iTunes. Insane.

Yet Apple trades at a PE ratio of around 19. When comparing this to Google (P/E of 63), Amazon (PE of 259) or Facebook (PE of 34), Apple looks like a bargain. Each of these companies competes with Apple in some way.

Disney (DIS):

Disney I think is well-poised for long-term success as virtual reality takes hold as a form of entertainment. I have only tried it once, at a trade show. It was underwhelming. But I’ve read reviews of VR from smart people who say it’s incredible.

One thing I can imagine happening is that people will be able to engage in games and experiences using VR that involve their favorite characters from Marvel, Pixar, Star Wars, Harry Potter, Disney’s original characters, etc.

I don’t need to try it to know one thing… From Disney to porn, it’s is the future of entertainment.

Disney’s acquisition of the prime Fox assets was a coup. Disney is also getting into streaming, like Netflix. When Disney announced they were doing this, the stock got crushed. What a typically stupid, short-sighted market reaction. Long term this is exactly what Disney needs to do.

Disney has a nice dividend as well.

Lending Club (LC):

Apparently most people and analysts dislike Lending Club. They’ve had some major issues. They had (and have) shareholder lawsuits and massive liabilities stemming from those claims.

However, the flip side is that most of those legal issues are behind them… And the future is all about online lending. The web and money are on a collision course. Whether it’s Amazon Coin or Apple Cash, or whatever, 10-20 years from now the money landscape will look totally different.

People will be able to get money and loans using artificial intelligence driven algorithms, etc. that will be fast and easy. Lending Club has that market in its crosshairs.

Also, if the promise of blockchain becomes reality, Lending Club is a potential beneficiary of that technology.

Indeed, asset backed tokens could be deployed by Lending Club itself in the process of making loans. I’m sure LC is thinking about this.

I sometimes wonder if Lending Club should do a name change. A successful name change could be a great way to push the reset button on Lending Club. Name changes are expensive, though.

5 Stocks I'm following

Iron Mountain (IRM):

Most people haven’t heard of Iron Mountain… But they’re an established player in the industry of backup and recovery of important documents.

Iron Mountain has a significant Fortune 500 customer base and are expanding into digital records recovery. Last time I checked we weren’t creating any LESS data than yesterday. Indeed, we’re creating terabytes of data every day.

Also, I don’t care what “the experts” say… People take comfort in the printed, written word. Digital devices are great, but people also like paper. And paper is always important if your digital backups disappear. Having both is even better… That’s what Iron Mountain is. A company to provide paper and digital backups of all your important business documents.

IRM also has a hefty dividend of >7% as of this writing. They have a history of raising the dividend and consistency in payments.

Tesla (TSLA):

Tesla is interesting just because Elon Musk is such a maniac. The guy is literally running 5 companies, all of which are doing unbelievable things, or are executing on plans that no one has ever had the guts to try to pull off. Meanwhile, Elon Musk is pulling off 5 of them simultaneously.

When you think about SpaceX, Tesla, The Boring Company, Open AI and Neuralink, it just blows my mind.

Thank goodness there are some people like that on Earth to admire. I hope that guy has some serious “key man insurance”. It will take a long time for Tesla to realize Elon Musk’s “Master Plan“. It will take decades. But it will happen, if we don’t destroy ourselves first.


  1. Facebook beat Apple’s services business in 2017.