CHAPEL HILL, N.C. (MarketWatch) — The headline for what’s happened in the tech sector this month could be “A Tale of Two Companies.”
On the one hand is Apple Inc. AAPL +0.82% , which has been on a tear. Despite market weakness over the past couple of weeks, Apple has surged to an all-time high. On the other hand is Cisco Systems Inc. CSCO +1.46% , which has been struggling for some time now. Earlier this week it cut another 6,500 jobs.
Over the last year, Cisco’s stock has fallen by more than 30%. Apple’s, in contrast, has risen more than 50% — breaking the $400 barrier, in fact, in after-hours trading Tuesday following its earnings report.
Maybe the better headline would be “The Beauty and the Beast.”
Given this apparently black-and-white contrast between these two companies, most tech investors think it’s a no-brainer that Apple is the better stock to purchase today.
And therein lies the problem.
In fact, according to any of a number of academic studies, glamour stocks that are as popular as Apple’s is today more often than not underperform out-of-favor stocks that are as unpopular as Cisco’s.