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Moving up the Food Chain

By Travis Johnson, Stock Gumshoe, August 24, 2011

Sometimes I look back and realize I’ve been a dope. This is one of those times.

I’ve been holding and/or actively buying shares of stocks that benefit from the mobile revolution and from the massive consumer businesses the breakthrough products from Apple (iPhone and iPad) have essentially created from scratch over the last couple years — stocks like O2Micro (OIIM), which sells power control equipment for LCDs, among other things, and Corning (GLW), which has a big growth business in Gorilla Glass for handheld devices. But I didn’t own Apple (AAPL).

Well, that changes now — after spending some time looking over the financials and the products for these companies, it is, in retrospect, stupid to buy the suppliers (who have a host of other issues — “small and Chinese” for OIIM and “too reliant on big screen TV glass” for Corning) and not to buy what is overwhelmingly the cheapest big growth stock in the world right now, and the best consumer stock and best tech hardware and software stock around, in my opinion.

Apple is still growing at a pace that many startups would envy, but they trade at a forward PE of 11 even if you don’t take account of their massive cash hoard, and they blow out analyst expectations every quarter and make consumers piss themselves in joy whenever they introduce a new product. It’s just dumb not to own a stock like that, and I’m putting my order in now — as soon as my trading limitation expires tomorrow (I mentioned Apple in an article on Monday), I’ll own Apple stock — and depending on where the price goes, I might buy more in the near future. Yes, everyone already knows Apple, and yes, it’s a stock with too much investor enthusiasm — but dammit, there’s a pretty good reason, they’ve taken over the world of computing on their own terms, and they seem to have broken the “law of large numbers,” they’re just not slowing down like I assumed they would … thanks, in large part, to the fact that they absolutely own the tablet space and they’re gradually taking over more and more of the smart phone space.

I still think there’s a place for the tech dinosaurs who have gotten so cheap (like Intel (INTC), which I think is still a great buy around these prices, and which I ...

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