Sell Apple, Buy RIM? Sell Baidu, Buy Groupon?


Groupon (NAS: GRPN) and Research In Motion (NAS: RIMM) are hot again. Apple (NAS: AAPL) and Baidu (NAS: BIDU) -- market darlings over the past several years -- are cold. These are bizarre times for investors.

It doesn't seem right, but charts don't lie. Shares of daily-deals leader Groupon have risen for seven consecutive trading days -- a rare feat in and of itself -- soaring a mesmerizing 50% in that time. RIM's stock has also closed higher in each of the past seven trading days, notching a nearly 39% pop in that time.

Weren't these the investments the market had left for dead?

The market's been rallying lately, so it wouldn't be surprising to see even laggards come to life, but this is really just one side of the transformation. Chinese search giant Baidu is actually trading lower than it was seven trading days ago. Apple has moved higher in that time, but the world's most valuable tech company is still trading 19% lower than it was when it peaked two months ago.

Market leadership -- at least when it comes to smartphones and cyberspace -- is going to the dogs.

The walking dead: RIM
Why is a company that has seen its share of the smartphone market shrink in half over the past year storming back into fancy? This isn't merely a dead-cat bounce. For the first time since just before last year's debut of the ill-fated PlayBook tablet, there's a reason to get excited about the company's future again.

BlackBerry 10 is finally coming. After a few unfortunate delays, a launch event is now just two months away.

Things aren't going to be easy for RIM. It needs to convince the growing legions of smartphone owners turning to Android and iOS that BlackBerry can be relevant again. And in this country, where handsets are hogtied to two-year contracts, RIM needs to convince buyers that BlackBerry will be supported and thriving come 2015.

Those are big hurdles for RIM to overcome, but things certainly seem a lot less challenging now that at least investors are starting to buy back into the story.

As for Apple's fade since hitting an all-time high in mid-September, it's not just that the company has been letting Google's (NAS: GOOG) Android pad its lead in smarpthones and catch up in tablets over the past year.

For starters, Apple is widely expected to bounce back this quarter after refreshing its iPad and iPhone lines. It's also not as if Big G is a shooting star these days. Google's stock is trading 14% off last month's peak.

The fundamentals may not justify the rotation out of the two stars of mobile computing, but just the fact that RIM has a shot -- after getting hammered as the stock went from triple digits in 2008 to the single digits until earlier this week -- makes the BlackBerry maker relevant again.

The walking dead: Groupon
Why is the biggest name in flash sales soaring when Groupon's model appears to be falling apart at the seams?

Sure, Groupon's original business is fading. Non-direct revenue is shrinking. The margins in Groupon Goods, payment processing, and bricks-and-mortar retail -- revenue streams that the company just began exploring over the past year -- won't be spectacular.

However, for a stock that went public at $20 late last year and still trades for more than 80% off its debut price, these new initiatives are redefining Groupon at its more compelling valuation.

But Baidu's fall during Groupon's ascent isn't likely to be a permanent passing of the dot-com crown. Baidu has taken a hit since starting to yield market share in China to a popular upstart this summer, but we're still looking at a company projecting 38% to 42% in year-over-year revenue growth this quarter.

However, Baidu's inevitable bounce won't necessarily coincide with more shrinkage from Groupon. Its adaptable model and 250,0000-merchant-strong client list shouldn't be underestimated.

Tax-gain selling and tax-loss buying
There could be another explanation to consider here. Back in March, I was one of the first to warn about what could be a "tax-gain selling" phenomenon by year's end.

With capital gains likely to head higher next year -- and potentially markedly higher for larger investors -- it wouldn't be a surprise to see a reversal of the historical trend of tax-loss selling. Instead of unloading their losers to lock in tax benefits, shareholders may want to unload their biggest winners before capital gains move higher.

Apple and Baidu -- two of the biggest tech winners over the years -- have plenty of investors sitting with huge paper gains. If selling now means a smaller tax bite than selling in 2013 or later, why not sell now and dive back in later?

This same phenomenon could also be benefiting Groupon, RIM, and other former laggards. Instead of getting dumped now -- and being repurchased in January, the way it typically goes for stocks whose investors face big losses on paper -- the incentive here would be to sell in January, when the value of tax losses will be higher under steeper capital-gains rates.

Instead of letting losers become even bigger losers toward the end of the year, opportunistic nibblers can buy in now -- as long as they keep a keen eye on any potential weakness come January.

It's different this time.

RIM shot
There's no denying that the next trillion-dollar revolution will be in mobile, and that's not just lip service. It's the name of a new free special report that you can check it out now. However, no one seems to be inviting RIM to the revolution.

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Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Baidu, and Google. Motley Fool newsletter services recommend Apple, Baidu, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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