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The Zacks Analyst Blog Highlights: Apple, Microsoft, Alphabet and Amazon
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For Immediate Release
Chicago, IL – January 22, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Apple’s Cash Repatriation a Big Win for Trump
True that Apple hasn’t said how much cash it’s bringing home, but the company has said that it will be paying $38 billion in taxes, or all the tax due on its overseas cash hoard of around $252 billion.
After all, the new tax law doesn’t give it much choice. The law requires companies to pay up their taxes irrespective of whether they are repatriating it or not. But it sweetens things up by lowering the rate from 35% to 15.5% on cash and 8% on less liquid assets. Apple had already provided for over $36 billion in case of this eventuality, so it won’t be a pressure on its financials either.
The new law also taxes income from patents held overseas at 13% and lowers the tax on patent income in the U.S. to 13.1%. Apple followed the practice of transferring some of its U.S. patents to its foreign subsidiaries in low-tax jurisdictions and then attributing substantial royalty income to them to avoid high U.S. taxes on that income. So transferring patents under the new law is no longer beneficial for the company.
Plus, Apple has been raising a lot of debt, most of which has been returned to investors through share repurchases and dividends. It’s actually advantageous for the company to pay off some or all of this debt and make future payments with cash it generates through the business.
It isn’t all negative for Apple and others since the new federal corporate tax rate has been lowered to 21% from 35%, so there will be ongoing savings on U.S. taxes.
So what will Apple do with the money? Other than paying its entire workforce a one-time bonus of $2,500 (which of course doesn’t make much of a dent in the cash pile), the company has said it will invest $350 billion in the U.S. over five years, a third of which will be on data centers. It will also build another campus, though we don’t know where yet.
The Advanced Manufacturing Fund that Apple created recently, will also see a cash infusion of $5 billion. Apple estimates that these efforts and its focus on creating software developers for the Apple platform will create 20K new U.S jobs (it doesn’t say how many people it will employ itself).
While other technology companies like Microsoft, Alphabet, Amazon haven’t said how the law will affect them, we should be seeing them make similar payments. But, Apple being first, has made the splash.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Apple, Microsoft, Alphabet and Amazon
For Immediate Release
Chicago, IL – January 22, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) , Alphabet (GOOGL - Free Report) and Amazon (AMZN - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Apple’s Cash Repatriation a Big Win for Trump
True that Apple hasn’t said how much cash it’s bringing home, but the company has said that it will be paying $38 billion in taxes, or all the tax due on its overseas cash hoard of around $252 billion.
After all, the new tax law doesn’t give it much choice. The law requires companies to pay up their taxes irrespective of whether they are repatriating it or not. But it sweetens things up by lowering the rate from 35% to 15.5% on cash and 8% on less liquid assets. Apple had already provided for over $36 billion in case of this eventuality, so it won’t be a pressure on its financials either.
The new law also taxes income from patents held overseas at 13% and lowers the tax on patent income in the U.S. to 13.1%. Apple followed the practice of transferring some of its U.S. patents to its foreign subsidiaries in low-tax jurisdictions and then attributing substantial royalty income to them to avoid high U.S. taxes on that income. So transferring patents under the new law is no longer beneficial for the company.
Plus, Apple has been raising a lot of debt, most of which has been returned to investors through share repurchases and dividends. It’s actually advantageous for the company to pay off some or all of this debt and make future payments with cash it generates through the business.
It isn’t all negative for Apple and others since the new federal corporate tax rate has been lowered to 21% from 35%, so there will be ongoing savings on U.S. taxes.
So what will Apple do with the money? Other than paying its entire workforce a one-time bonus of $2,500 (which of course doesn’t make much of a dent in the cash pile), the company has said it will invest $350 billion in the U.S. over five years, a third of which will be on data centers. It will also build another campus, though we don’t know where yet.
The Advanced Manufacturing Fund that Apple created recently, will also see a cash infusion of $5 billion. Apple estimates that these efforts and its focus on creating software developers for the Apple platform will create 20K new U.S jobs (it doesn’t say how many people it will employ itself).
While other technology companies like Microsoft, Alphabet, Amazon haven’t said how the law will affect them, we should be seeing them make similar payments. But, Apple being first, has made the splash.
All of these technology companies have a Zacks Rank #3 (Hold). But you can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.