Apple vs. Tesla
Driving Up Mt. Washington
Back on July 27, in a column titled “Sell Apple,” I told you that Apple, the world’s most loved and most highly valued company, was likely past its point of peak perception. I suggested that even though the company would continue to grow, its stock would suffer as investors slowly sold and went searching for the next Apple. (Precedents include both IBM and Microsoft.)
Since that day, of course, the broad market has fallen apart, and it’s enlightening to see how certain stocks have behaved since then.
AAPL fell to a low point that was down 25% from that day, and it now rests down 7%.
In comparison, the Dow Industrials fell 12% and are now down 5%.
And Tesla Motors, another high-profile stock, fell 23% (slightly less than AAPL) and is now back where it was on July 27, in effect besting both the Dow and AAPL.
In short, the market, valuing all the factors, in recent weeks has been saying that TSLA is more attractive than AAPL or the Dow.
Below is a personal illustration of why that might be.
At the recent Cabot Investors Conference, many attendees told me they loved reading about my trips. Here’s a recent one—with a bit of historical background.
Mt. Washington is the highest peak in the Northeastern U.S., standing 6,288 feet above sea level and boasting the worst weather on the east coast. I climbed it twice as a child with my family, and I skied it on two occasions when in my 20’s, hiking up Tuckerman’s Ravine in the spring.
But I’d never driven up it until this year—and it wasn’t for lack of a road.
There’s been a road to the top of Mt. Washington since 1861, originally created to allow easier access to the two hotels operating on the summit (Summit House and Tip-Top House).
The first person to drive up the mountain was Colonel Joseph M. Thompson, who on July 13, three weeks before the 7.6-mile road was completed, drove a one-horse buckboard to the summit—with two men holding the carriage upright over the rocks over the last mile where the road was unfinished. His motivation was beating a rival innkeeper.
Here’s Colonel Thompson. And his horse, who did most of the work.
The first automobile to ascend the mountain was a Stanley Steamer, driven by Freelan Oscar Stanley, who was accompanied by his wife Flora, in 1899.
Freelan and his brother Francis had sold their nascent automobile business to asphalt tycoon Amzi Lorenzo Barber the year before, and stayed on a year as technical and promotional consultants.
Barber renamed the car the Locomobile (marketing) and sent Stanley and his wife up Mt. Washington to prove the automobile’s capabilities (more marketing).
The trip from Newton Massachusetts to the start of the auto road (then called a carriage road) took an eventful five days. And the ascent of the mountain itself took just two hours and ten minutes, far less than the six hours needed by the horse-drawn stage.
Here’s a picture of the Stanleys.
Today, some 40,000 cars are driven up the mountain every year (the fee is $28 for a car and driver), and each one gets a bumper sticker.
This year, I finally got mine.
But I didn’t put it on my car. And I doubt that any of the other owners of the 25 all-electric Teslas in our group did either.
But that doesn’t mean we didn’t love our drive.
At a maximum recommended speed of 20 mph, our group drove to the summit in less than half an hour.
In the quiet, one-gear, amply-powered Teslas, the drive was a piece of cake, compared to drives I’ve done at speed on twisty Italian mountain roads in underpowered manual cars.
Halfway up, we ran into clouds.
At the top, we parked our cars and enjoyed the view.
No, there was no view.
But we did enjoy exploring the mountaintop, mingling with other Tesla owners, and watching both the hikers and the people who’d ridden up on the cog railway (that’s a subject worthy of a story itself). And after an hour or so, we drove down.
Which turned out to be the scariest part for my wife (because looking down, she could imagine the consequences of one wrong turn). But it was the best part for me, as a driver, because I only touched the brakes twice!
The marvelous thing about the Tesla is that going downhill charges the car’s big battery, as the motor acts as a generator, in the process slowing the car to the desired speed.
So while all the “normal” cars were using their brakes to the max, and risking overheated brake pads, the Teslas were totally unstressed, putting energy back into their batteries and thus increasing their range, all the way down.
Bottom line: it was a lot of fun.
I still believe Tesla is a great long-term investment, especially if, like many of my readers, you’re sitting on big long-term profits. The stock’s behavior in recent weeks shows it has substantial support.
But I don’t rate TSLA a buy today; the stock is still in consolidation mode, cooling off from its massive advance in 2013, after the Model S was named best car in world by numerous industry observers.
What I do rate buy are stocks that are acting very well today, like little-known Vantiv (VNTV).
Vantiv was recommended by Cabot Top Ten Trader a month ago, after it popped high on the heels of a good earnings report. It looked so attractive then that head analyst Mike Cintolo made it his Top Choice!
Here’s what Mike wrote then.
“Previously known as Fifth Third Processing Solutions (a nod to its partner Fifth Third Bank), Vantiv is one of the largest and most progressive companies in the payment processing industry, as well as the nation’s largest PIN debit acquirer. Headquartered in Cincinnati, Ohio, the company today has offices in Arizona, Colorado, Illinois, Kentucky, Massachusetts and Texas. Its client base includes nearly 400,000 locations. It has special relationships with big retailers Barnes & Noble, Dollar General, The Kroger Company, Walgreens, Kohl’s, Macy’s and T.J. Maxx, as well as restaurants In-N-Out Burger, T.G.I. Friday’s, Wendy’s International and Bob Evans. In recent years, the company has strengthened its technology and grown by acquisition: it’s now linked to more than 1,350 financial institutions, including more than 700 credit unions, and processes more than 15.7 billion transactions a year. Short-term, the stock is strong because the company released an excellent earnings report last week, but long-term, Vantiv looks like a fine bet on the continued growth of the cashless society.… Going into last week, the stock had found resistance at 41 many times over the previous ten weeks, but the earnings report triggered a high-volume gap up to 44, and since then the stock has been working on consolidating that gain. The buyers are in control here; there are few motivated sellers. Knowing that, we think it’s best to buy here.”
Since then, of course, the broad market has fallen apart. But VNTV, which dipped as low as 38 last Monday, is right back near its highs! In short, investors discovering the company and putting in buy orders outnumber investors looking to cash out—and there aren’t many stocks you can say that about today.
Now, this may be the first you’re read about Vantiv, so you probably won’t act on this recommendation alone.
In fact, it’s more likely that you’re still in love with Apple, and that getting you to sell that well-loved stock is going to take more time—and more pain.
But remember, nearly every potential investor in AAPL already owns that stock; they’re all potential sellers!
VNTV, on the other hand, has hordes of potential buyers, some of whom are already having an effect.
Bottom line: I think your odds are far better in little-known stocks like VNTV, that are acting well and demonstrating growing support.
For more details, as well as regular updates on VNTV and a slew of similar high-potential stocks, I recommend that you become a regular reader of Mike’s Cabot Top Ten Trader, so that you’ll not only be updated on VNTV every month, you’ll also read about nine other high-potential stocks, every Monday!
For details, click here now.