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==> This coveted award makes Apple stock a ‘sell’
By Mark Hulbert | March 24, 2017

Company is too popular to be a good investment now

This would be a good time to sell some of your Apple shares.

That’s because Apple AAPL, -0.01% tops Fortune magazine’s recently released ranking of America’s most admired companies.

What’s the problem with that? Companies as admired as Apple typically have difficulty living up to stock investors’ lofty expectations. History suggests you’d be better off investing in companies that are least admired — companies such as Comcast and Bank of America.

Let me hasten to add that I’m not saying that Comcast, Bank of America, or other least-admired firms are better companies than Apple. They’re certainly not more profitable.


But the amount of money you make when investing in a stock is a function not of its profitability in any absolute sense but its profits relative to investor expectations. And since those expectations are already so low with stocks that are out of favor, you can make more money with them even when their business performance turns out to be merely mediocre.

Don’t take my word for it. Consider a study conducted several years ago by two finance professors: Deniz Anginer at Virginia Tech and Meir Statman at Santa Clara University. The researchers constructed two portfolios out of the stocks on Fortune’s annual list. The first contained the stocks of companies that were most admired companies, while the second contained those with the lowest Fortune scores — those most despised, in other words.

Between April 1983 and December 2007, the Despised Company portfolio outperformed the Admired Portfolio by nearly two percentage points per year, on average. Perhaps even more revealing, the professors found that increases in admiration were, on average, followed by lower returns. (See the chart below.)



This historical pattern doesn’t hold up every year, needless to say, and last year was one of those exceptions. Apple was the most-admired stock on Fortune’s list in 2016, and has since risen 33.1%. Still, the most-hated stocks I listed in a year-ago column have performed almost as well, gaining an average of 27.0% over the last 12 months, nearly double the S&P 500’s SPX, +0.08% 15.8% return.

Which are the most hated stocks today? Fortune doesn’t publish such a list, but — fortunately —24/7 Wall Street does. Here are the companies in the top 10 of their list that are also recommended currently by at least one of the top-performing advisers I monitor:

· Bank of America BAC, -0.41%

· Comcast CMCSA, +0.17%

· Facebook FB, +0.83%

· McDonald’s MCD, +0.33%

· Wells Fargo WFC, +0.66%

If history is any guide, these hated stocks are better bets right now than Apple.

http://www.marketwatch.com/story/this-coveted-award-makes-apple-stock-a-sell-2017-03-24

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