Among the biggest winners in Monday's early trading are Apple (Nasdaq: AAPL), Nokia (NYSE: NOK), Avis Budget (NYSE: CAR) and Tiffany & Co. (NYSE: TIF).

Read on for our instant analysis...

The Apple/Samsung fallout

The Apple juggernaut continues. A key legal verdict handed down this weekend found that South Korea's Samsung (Nasdaq: SSNLF) infringed on patents. The ruling helps Apple in two ways. First, it adds another $1 billion to its balance sheet (subject to appeal). More important, it makes it harder for rivals to mimic the look and feel of Apple's various devices. Shares of Apple are up more than 2% on the news, to another all-time high.

In this piece written back in June, I laid out a case for more upside for Apple, and though we're closer to the end than the beginning of this great multi-year move in the stock price, it's not time to harvest profits yet.

The ruling is an obvious setback for Samsung, but investors need to watch for fallout among other smartphone players such as Google (Nasdaq: GOOG). That firm's Android operating system certainly seems a lot like the iPhone's operating system. Apple has yet to formally pursue a legal challenge with Google (perhaps because Google's hardware partners make the profits on the devices), but you need to watch these events closely.

Yet a possible winner (besides Apple) is emerging from the dust-up. Seemingly back from the dead, shares of Nokia are rallying 9% this morning. Apple is seeking to keep any Samsung phones that use Apple patents off the market in the United States, and if successful, could create an opening for Nokia's Lumia phones, which is based on Microsoft's tile-based software and is radically different from the Apple interface.

I highlighted the opportunity for Nokia back in early March, though it eventually became clear that Nokia's phones got off to a slow start. Shares slumped to decade lows this summer on lingering concerns that Nokia's ongoing losses will eventually imperil its balance sheet. Still, you have to be impressed by the nearly 100% gain in this stock since July 20. Either way, this is a high-risk/high-reward play requiring further research.

Forget Hertz, buy Avis

After several years of wrangling, car rental firms Hertz (NYSE: HTZ) and Dollar Thrifty (NYSE: DTG) will finally tie the knot. Hertz will pay $2.6 billion, which represents only a small premium to Friday's closing price for Dollar Thrifty. The deal had already been widely anticipated and largely priced in.

Yet the real winner here appears to be Avis, which is rallying 5% on the news, but likely has ample more long-term upside. That's because the car rental industry has periodically suffered from profit-sapping price wars. Yet as Hertz starts to streamline to absorb Dollar Thrifty, look for some of the extra rental car counters to shut down. And reduced capacity almost always leads to firmer pricing.

More broadly, Avis is in the midst of a multi-year turnaround, led by an October 2011 purchase of Avis Europe. With all of the Avis global franchises under one roof, management is embarking on cost-cutting actions while pursuing relationships with multinational customers that want to work with one vendor across the globe -- a task that only Hertz used to be able to handle. Those efforts are already reaping fruit as Avis topped second-quarter profit forecasts by a hefty 34% on Aug 1. Shares appear reasonably priced at less than seven times projected 2012 profits.

Tiffany: Not bad = good

Investors were expecting a dowdy profit report from high-end retailer Tiffany & Co. (NYSE: TIF). After all, it's been a summer of discontent across Europe, which is a key market for the company's various baubles. So the fact that same-store sales in the quarter ended July 31 fell just 1%, not nearly as bad as some had feared, is cause for cheer. In this case, "not bad" can be seen as good news. It underscores what the company's supporters believe is a solid spending environment among the upper-income set.

Shares are up about 5% this morning, but are still some 25% off the 52-week high of $80 seen in October 2011. Surely, even the well-heeled are feeling a bit cautious, so when the fear of a global economic meltdown finally recedes, these folks may really spend in a big way. Tiffany & Co. is holding up well now, and should do even better down the road.

Action to Take --> While everybody is talking about Apple today, you should be looking at Avis. This company stands to benefit from both industry consolidation and internal cost-cutting. The current single-digit multiple is based on depressed profits, as the global economy remains in a funk. Shares are even more inexpensive when you consider what profits may look like in a few years, when the global economy is healthier.

Related Articles
  1. Economics

    Long-Term Investing Impact of the Paris Attacks

    We share some insights on how the recent terrorist attacks in Paris could impact the economy and markets going forward.
  2. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  3. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  4. Mutual Funds & ETFs

    Buying Vanguard Mutual Funds Vs. ETFs

    Learn about the differences between Vanguard's mutual fund and ETF products, and discover which may be more appropriate for investors.
  5. Mutual Funds & ETFs

    ETFs Vs. Mutual Funds: Choosing For Your Retirement

    Learn about the difference between using mutual funds versus ETFs for retirement, including which investment strategies and goals are best served by each.
  6. Mutual Funds & ETFs

    How to Reinvest Dividends from ETFs

    Learn about reinvesting ETF dividends, including the benefits and drawbacks of dividend reinvestment plans (DRIPs) and manual reinvestment.
  7. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  8. Mutual Funds & ETFs

    Best 3 Vanguard Funds that Track the Top 500 Companies

    Discover the three Vanguard funds tracking the S&P 500 Index, and learn about the characteristics and historical statistics of these funds.
  9. Forex Fundamentals

    How to Buy Chinese Yuan

    Discover the different options that are available to investors who want to obtain exposure to the Chinese yuan, including ETFs and ETNs.
  10. Mutual Funds & ETFs

    ETF Fees: Why BlackRock is the Latest to Cut Them

    Low expense ratios are a big selling point for ETFs, but are they being focused on too much?
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  3. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  4. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  5. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
  6. Can mutual fund expense ratios be negative?

    Mutual fund expense ratios cannot be negative. An expense ratio is the sum total of all fees charged by an asset management ... Read Full Answer >>

You May Also Like

Trading Center