VIDEO: Apple's Foldable iPhone Reports Are Positive for This Holding

In today’s Daily Rundown video, Chris Versace discusses some of the latest consumer spending data points, including the beauty salon indicator and quarterly results from Albertson’s ACI, ahead of Wednesday's March Retail Sales report. 

Chris explains how these findings support the Portfolio’s positive stance on Costco COST shares. We dig into 1Q 2025 smartphone shipment data that shows Apple AAPL picking up market share and discusses the latest indication that Apple is moving closer to a foldable iPhone, a positive for the Portfolio’s position in Universal Display OLED.

Transcript

CHRIS VERSACE: Hey folks, Chris Versace here. It is Tuesday, April 15th. I'm back in the states, as you can see. Back in the command center, I guess, we'll call it. Anyway, in our opening comments today, we did touch on some disappointing results by luxury goods company LVMH. And I think it's just really indicative of how consumers, all shapes and sizes, are kind of retrenching a little bit.

You know, uncertainty, as we've discussed, is rather rampant in times of uncertainty, especially with headlines about layoffs, slowing economies. You know, we can kind of have a self-fulfilling prophecy of slower consumer spending. And it's important that we watch it because consumers, as we've discussed, they are directly/indirectly about two-thirds of the US economy. So we want to be especially mindful to that, paying attention both to the hard data and the not-so-hard data, survey data, that sort of thing.

We will get some tomorrow in terms of the March retail sales report. Again, little backward looking, arguably because of what we've seen with tariffs more recently. But we still want to pay attention to it, in part because when we get the March Retail Sales Report, it's going to provide us a nice trailing three-month look at overall retail sales and the various categories. That is going to help set a yardstick of sorts for companies that will soon be reporting.

Now, in our opening comments, too, we also talked about another kind of soft indicator, the beauty salon indicator. Now, this is hardly extremely scientific, but I think it does point out that consumers are stretching the amount of time between haircuts and other treatments that they might have. And what this tells us is that consumers are increasingly mindful of discretionary spending.

So again, not exactly a hard data point, but with the amount of time being extended between these types of treatments or the types of treatments being traded down, it just tells us that again, consumers are becoming increasingly selective. And I think we also saw that in quarterly results out this morning from Albertsons grocery chain company. They reported that their comp sales for the February quarter rose about 2.3%. But when we dig into this pretty interesting stuff, the increase was primarily driven by its pharmacy sales, not grocery sales.

So when we think about that and we think about consumers trading down, looking to stretch their disposable spending dollars, this really speaks to one of the reasons why we've remained relatively bullish on the shares of Costco. Remember the expansion over the last not just several years, but longer than that into fresh foods, prepared foods, sundries and that sort of thing. Same with Walmart.

And I continue to think that these two companies in particular will continue to benefit by consumers looking to extend, maximize, if you will, their grocery spending. So when we look at the March Retail Sales Report out tomorrow, two of the line items that we will be comparing are grocery sales and dining out sales. I suspect that we're going to see dining out continue to soften and grocery continue to improve. That will be a very positive data point for Costco.

And remember that whenever we get a monthly sales report, we always like to do the compare and contrast against Costco's own monthly sales report. Odds are, I suspect that when we get the March Retail Sales Report, it too, will show that Costco continued to take consumer wallet share. And based on what we learned, we will revisit our Costco price target as necessary.

Now, with the close of the March quarter as well, we are starting to get some other interesting statistics for various parts of the economy, but also for various parts of different industries. One of those came out very recently. It's from IDC and it's about the smartphone market.

Now, you know we pay attention to this given the portfolios positions of course in Apple but also Qualcomm and Universal Display. So what did IDC find for the March quarter? Overall, smartphone sales rose 1.5% year-over-year to about 304.9 million units. Let's look at Apple.

Their shipments rose 10% year-over-year, according to IDC, to about 57.9 million units. And because it grew far faster than the industry, that means that yes, Apple picked up market share during the quarter. Now, fortunately for us, Taiwan Semiconductor is going to report on Thursday. So we'll be able to kind of get another take on these findings from IDC.

But we'll also be interested in what Taiwan Semiconductor has to say about its outlook, not just for AI and data center. Yeah, of course, we will, given several positions in the portfolio. But what does it see for smartphone, as well as other connected devices. And then as I just mentioned about Costco, as we get this new information, we will revisit our price targets accordingly, in part because they will set the tone not only for what we'll hear from Apple, Qualcomm and others when they report their March quarter, but it'll also help shape expectations for their June quarter guidance as well.

Quickly sticking with Apple and smartphones, I think that one of the items that we've been closely tracking is the foldable smart phone market as it figures into demand for Universal Display. And the thinking is that the largest surface area drives larger displays, drives greater demand for the chemicals and solutions that Universal Display supplies into the organic light-emitting diode market.

And it's the organic light-emitting diode market that enables the stretchable displays that are found in foldable, as well as other devices. So again, this is something that we've been tracking quite a bit, and we've been waiting for Apple for some time now to kind of make a foray into this. There's been reports that perhaps they would do foldable iPads, foldable iPhones.

Well, the latest seems to suggest that Apple is going to move forward with a foldable iPhone and they will use displays from Samsung Display. Arguably, this is a nice and overdue development. But you know, Apple tends to enter the market right at the tipping point. It is really one of their strengths compared to some other companies out there that might move just a little too early.

But what's important here is that Samsung Display is a key customer for Universal Display. So that tells us that we're that much closer to this becoming a reality. And indications are that Samsung Display is going to start shipping displays for a foldable iPhone late this year or early next year. So this tells us that 2026 should be a much better year for the shares of Universal Display.

And remember that when Apple leans into something, we tend to see others follow. So that's another reason to think that the outlook for 2026 for Universal Display should be even brighter, no pun intended, than 2025. Now, let's close today's video by discussing Jefferies cutting its 2025 base case for the S&P 500 to 5,300 from 6,000.

Now, is Jeffreys the first firm that we've seen make a sharp cut? No, we've shared them with you whether it's Goldman's, Barclays or others out there. And several weeks ago, we did go through kind of a scenario analysis with you, with potential S&P 500 2025 EPS figures and what that could mean for multiples, PE multiples assigned to the S&P 500.

You know, would we say that Jefferies is taking a harder look than some others out there? Possibly. But candidly, I think that given the evolving landscape on tariffs, what we hear from companies over the next several weeks are going to help us really understand what the prospects for June quarter earnings from the basket of companies, that is the S&P 500, and what the prospects are for the back half of the year. Those will become a little clearer.

And as we get those, we can start to refine those expectations, which should give us a better sense as to whether Jefferies in 5,300 or 5,500, 5,600 that some others have are a little closer. But remember, this is going to be an evolving landscape and we'll have to pay attention. But I would also remind you that as much as we pay attention to the market, the market multiple, we don't buy the market.

Rather, we prefer to buy well-positioned companies benefiting from multiyear tailwinds and companies that are poised to benefit from more consumers, companies and other institutions like governments are spending. We'll continue to focus in on those looking for favorable risk to reward entry points. So that's today's video, and we'll have a lot more coming your way. And for those folks that shared questions for The Street pros, Peter Scheer, stay tuned because we'll have some answers for you before you know it. Thanks for watching.

At the time of publication, TheStreet Pro Portfolio was long COST, AAPL and OLED.