2015

Financial Mirror (Cyprus) - - FRONT PAGE - By Jon C. Ogg

Stocks de­cided to take a breather at the end of May, bring­ing up many ques­tions ahead of sum­mer about just how strong and pow­er­ful this bull mar­ket can re­main af­ter six years. The bad news is that each rally feels like it reaches ex­haus­tion quickly. The good news is that in­vestors have lined up in droves for al­most four years now to buy their fa­vorite stocks on ev­ery pull­back.

24/7 Wall St. has looked closely at which stocks lead­ing the mar­ket and which are hurt­ing it. With a 2015 pro­jec­tion of 19,142 for the Dow Jones Industrial Av­er­age (DJIA), our ini­tial es­ti­mate was that the Dow might gain 7% or so in 2015, with a handy por­tion of that com­ing from div­i­dends.

It turns out that six of the 30 Dow stocks are hurt­ing the broader in­dex so far in 2015. Now that May has come to an end, 12 of the 30 Dow stocks are run­ning in the red with neg­a­tive per­for­mance, if you in­clude their div­i­dend pay­ments.

The other 18 Dow stocks were pos­i­tive. The me­dian loss of the 12 losers was 6%, while the me­dian gain among the 18 win­ners was right at 7%.

Ac­cord­ing to In­dexArb.com, each of the six Dow stocks hurt­ing the mar­ket also have av­er­age in­dex weight­ings since the Dow is a price-weighted in­dex rather than a mar­ket cap-weighted one. 24/7 Wall ran the year-to­date per­for­mance of each of the six worst DJIA losers, and we in­cluded the loss and the weight­ing in the Dow (from In­dexArb).

The losers in or­der of worst per­for­mance (worst to least-bad) were as fol­lows: - Amer­i­can Ex­press Co. (NYSE: AXP) - Proc­ter & Gam­ble Co. (NYSE: PG) - Wal-Mart Stores Inc. (NYSE: WMT) - Exxon Mo­bil Corp. (NYSE: XOM) - Chevron Corp. (NYSE: CVX) - Cater­pil­lar Inc. (NYSE: CAT) When 24/7 Wall St. gave its in­di­ca­tion of a 19,142 peak in the Dow in 2015, we also ran a bull and bear anal­y­sis for each of th­ese Dow gi­ants. Some have done ex­actly as ex­pected, but some have of­fered sur­prises as well.

2015 YTD: -13.78% Dow Weight­ing: 2.95%

Amer­i­can Ex­press just can­not catch a break in 2015. Its div­i­dend hike is not enough to en­tice buy­ers, but the good news is that its val­u­a­tion is get­ting dirt cheap. Fresh news that Pres­i­dent Ed Gil­li­gan died sud­denly on a flight at age 55 has not helped mat­ters. Nei­ther has the loss of Costco. 24/7 Wall St. even high­lighted five rea­sons AmEx share­hold­ers are suf­fer­ing.

Amer­i­can Ex­press shares were re­cently trad­ing at $79.72. The stock has a con­sen­sus an­a­lyst price tar­get of $86.04 and a 52-week trad­ing range of $76.53 to $96.24. Its mar­ket cap is $81 bln, and the yield is still a paltry 1.4%. The AmEx bull/bear anal­y­sis called for a 7.2% gain in 2015.

2015 YTD: -12.63% Dow Weight­ing: 2.90%

This is a great com­pany with great brands, mak­ing it the largest con­sumer prod­ucts gi­ant in the world. Still, it has be­come too hard to op­er­ate a gi­ant of its size with so many brands. So the com­pany is re­struc­tur­ing. It is sell­ing Du­ra­cell to War­ren Buf­fett and Berk­shire Hathaway, and it has a lot of room to im­prove. It also has to learn how to com­bat cur­rency head­winds. De­spite P&G’s prob­lems, it is now equal to Kim­ber­lyClark (or bet­ter) in the ten stocks to own for the next decade. Its div­i­dend am­bi­tions are also ex­pected to keep grow­ing.

Proc­ter & Gam­ble shares were at $78.39 to end out on May, be­low the con­sen­sus price tar­get of $87.56. The stock has a mar­ket cap of $215 bln and a 52-week trad­ing range of $77.29 to $93.89. P&G yields 3.3% now. The bull/bear anal­y­sis here called for a 3.8% gain in 2015.

2015 YTD: -12.45% Dow Weight­ing: 2.75%

Wal-Mart may

be

a

large

hold­ing

of War­ren Buf­fett, but the world’s largest re­tailer keeps hav­ing is­sues. You would think a strong dollar would help its prof­its with lower prod­uct costs, but that may also be cap­ping its sales growth. Wal-Mart also keeps fight­ing the end­less growth of dollar stores. What the next driv­ing force will be re­mains up in the air, and share­hold­ers have de­cided to step back. If wage pres­sures keep ris­ing in the United States, it is go­ing to pres­sure Wal­Mart’s op­er­at­ing costs — and whether more con­sumer dol­lars would off­set the higher costs re­mains to be seen.

Shares of Wal-Mart were at $42.27 on Fri­day’s closing bell, with a mar­ket cap of $243 bln. The con­sen­sus an­a­lyst price tar­get is $80.57, and the 52-week trad­ing range is $72.61 to $90.97. Its yield is roughly 2.6%. Our Wal-Mart bull/bear anal­y­sis called for a loss of 1.9% in 2015.

2015 YTD: -6.38% Dow Weight­ing: 3.16%

One of the best oil and gas com­pa­nies in the world, Exxon is also the largest of all. Still, lower oil prices are hurt­ing the com­pany and the group as a whole. Due to the long-term fun­da­men­tals, this was re­named as one of the ten stocks to own for a decade — just don’t ex­pect that share price to launch any time soon. There may still be more risk in the oil patch, and Exxon may de­cide that it wants to gob­ble up smaller oil field own­ers if their stocks stay cheap or get bat­tered fur­ther. To prove how strong this is even with lower oil prices: Exxon was able to raise its div­i­dend.

Exxon shares

were

trad­ing

at

$85.20, com­pared to the con­sen­sus price tar­get of $93.61. The com­pany has a mar­ket cap of $356 bln, and shares are near the lower end of the 52-week trad­ing range of $82.68 to $104.76. Exxon’s re­cent div­i­dend hike and a lower share price gen­er­ate a 3.4% yield for new in­vestors. The Exxon 2015 bull/bear anal­y­sis called for a 9% gain this year.

2015 YTD: -6.36% Dow Weight­ing: 3.82%

Chevron has the same sec­tor woes as Exxon, but Chevron de­cided that it had bet­ter not raise its div­i­dend just yet. Chevron posted lower rev­enues and earn­ings, just like Exxon. The val­u­a­tions in the sec­tor are so var­ied that look­ing cheap in share prices might not be cheap based on his­tor­i­cal price to earn­ings (P/E) val­u­a­tions.

Shares of Chevron were trad­ing hands at $103.00, within a 52-week trad­ing range of $98.88 to $135.10. The con­sen­sus price tar­get is $114.09, and the mar­ket cap is al­most $194 bln. Chevron did not raise its div­i­dend, but due to its lower price it now gen­er­ates a 4.2% yield. The Chevron bull/bear anal­y­sis called for a 13% gain in 2015. Need­less to say, oil is go­ing to need to se­ri­ously re­cover for that gain to be seen. An­a­lysts have since tem­pered ex­pec­ta­tions hand­ily.

2015 YTD: -5.24% Dow Weight­ing: 3.16%

Cater­pil­lar faces growth is­sues in all the so-called growth mar­kets around the world. Min­ing and in­fra­struc­ture are se­ri­ous is­sues that helped act as a driver, but now they are a load stone. Cur­rency is­sues are also present, even though the com­pany over­came much of the con­cerns. Cater­pil­lar’s Ma­chin­ery, En­ergy & Trans­porta­tion seg­ment had a decline in rev­enue, and Cater­pil­lar used only $400 mln in cash un­der the $10 bln buy­back plan to buy shares last quar­ter.

Shares of Cater­pil­lar closed out May at $85.32, within a 52-week trad­ing range of $78.19 to $111.46. The con­sen­sus price tar­get is $84.37, and the mar­ket cap is al­most $51 bln. Cater­pil­lar now has a div­i­dend yield of 3.2%. The bull/bear out­look for 2015 ex­pected a 19% gain in 2015, but that has so far been way out of reach.

The Dow was up 2.1%, if you in­clude the div­i­dends paid in. The SPDR Dow Jones Industrial Av­er­age ETF Trust (NYSEMKT: DIA) and the raw in­dex per­for­mance was up 1.05% as of the end of May.

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