Tag Archives: Dow Jones Industrial Average

See How Verizon Communications Ranks Among Analysts' Top Dow 30 Picks

By DividendChannel.com

A study of analyst recommendations at the major brokerages shows that Verizon Communications Inc (NYSE: VZ) is the #18 broker pick, on average, out of the 30 stocks making up the Dow Jones Industrial Average, according to ETF Channel. Despite being ranked lower than the median among analyst picks of the Dow, Verizon Communications Inc ranks better than the median among analyst picks for the broader S&P 500 index components, claiming the #234 spot out of 500. …read more

Source: FULL ARTICLE at Forbes Markets

Options Players Ferociously Bullish On Pfizer, 3D Systems

By Caitlin Duffy, Contributor

PFE – , Inc. – Shares in Pfizer are among the few stocks in the Dow Jones Industrial Average that are trading higher today, up 0.80% on the session at $29.61 as of midday in New York, amid a down day for U.S. equities. The stock is on the rise after the drug maker announced the reorganization of its commercial operations into three business units. …read more

Source: FULL ARTICLE at Forbes Latest

Simple Innovations Can Have Huge Consequences

By Alex Planes, The Motley Fool

Filed under:

On this day in economic and business history …

Several innovations reached critical milestones in their development on April 27. All three of those we’ll examine today have affected the companies on the Dow Jones Industrial Average , but the effect isn’t always straightforward, nor is it always positive. In fact, the first development on our list never added much at all to its creator’s bottom line — but its influence on the computing industry (which has placed five companies on the Dow) is undeniable. Let’s take a closer look at these three developments, to better understand how they’ve helped shape the business world as it exists today.

Point and click, day one
Xerox introduced the world’s first commercially available computer mouse on April 27, 1981. The mouse had been invented way back in the 1960s by Douglas Englebart and his team of researchers at Stanford, but it would take many years for technologists to translate his innovations into commercially successful products. In fact, until the mouse was released as part of the Xerox Star workstation package, there had been no computers with graphical interfaces available for public purchase. Without graphical interfaces, there simply hadn’t been a reason for anyone to use a mouse.

The Star’s graphical interface and its mouse were both descendants of the legendary Xerox Alto, an experimental computer developed by Xerox’s Palo Alto Research Center that is largely known now for its influence on young entrepreneurs Steve Jobs and Bill Gates. However, like the Alto, the Star was too far ahead of its time and wound up quickly eclipsed by a lower-cost but less-functional computer released later in 1981: the PC.

It was not until 1984, when Apple launched the Macintosh, that a computer purpose-built for mouse controls caught on with the public. By the time Dow component Microsoft‘s Windows 1.0 hit the market in 1985, the mouse era had taken hold. The combination of a mouse with a graphical user interface could have propelled Xerox ahead of PC creator (and longtime Dow component) IBM, but Xerox’s inability to capitalize on advanced technology is the stuff of corporate legend. IBM is no less to blame for its inability to maintain control of the standard it created. By allowing Microsoft to control the PC‘s operating software, IBM missed a golden chance to leverage its scale and technological expertise into a fully proprietary mouse-based computing experience.

How much longer will the mouse era last? The mouse may soon find itself relegated to technology’s dustbin as touchscreen devices gain prominence with the public. That won’t happen for some time, but it’s interesting to think about what our next control scheme will be. Beyond touch, will we move things on the screen with our eyes? Will our brainwaves be the next control scheme? The answer may be just around the corner.

The 747’s biggest threat
The

Source: FULL ARTICLE at DailyFinance

The Top 3 Stocks on the Dow

By Travis Hoium, The Motley Fool

Filed under:

It was a week without a definitive direction on Wall Street, but at the end of the day, stocks continued to move higher. The Dow Jones Industrial Average was up 1.13% this week and the S&P 500 rose 1.74%. On the economic front, we saw slow home sales on Monday, decent unemployment news on Thursday, and weaker-than-expected GDP and consumer confidence on Friday. But investors focused on more company-specific items to drive stocks higher.

DuPont led the Dow by jumping 7.5% this week. Last quarter’s earnings disappointment set extremely low expectations for the company in the first quarter, but it was able to meet them. First-quarter revenue rose 2% to $10.4 billion, and earnings from continued operations fell slightly to $1.46 billion, or $1.56 per share. The real hope was that earnings will pick up later in 2013 because ag unit sales were up 14% and volume grew 8%, so we could be in for much better results in the future.  

Microsoft rose 6.8% this week as sentiment toward the company continued to improve. Microsoft beat earnings estimates, and the stock continued its steady rise all week. The two main news items were a patent ruling win against Motorola and a debt offering. The patent ruling was the first of two major cases in which Google‘s Motorola subsidiary had claimed it was owed $4 billion in royalties, but the judge found that $1.8 million was a more appropriate payment. The second trial is set for this summer. The company also announced $2.7 billion in bond sales.

Bank of America rounds out the top three, gaining 6.5% this week. The stock is especially sensitive to economic news, and despite GDP growth that came in lower than expected, investors were happy to see solid growth, and decent unemployment data helped pushed the stock higher. The company also settled with former Merrill Lynch brokers who claimed they were owed deferred compensation. The company will pay $21 million to settle the class action lawsuit, putting another black eye from the financial crisis behind it.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Are Bonds Announcing a Stock Market Correction?

By Alex Dumortier, CFA, The Motley Fool

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This week’s see-saw dynamic in U.S. stocks continues this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average up 0.65% and 0.55%, respectively, at 10:05 a.m. EDT.

Moving in separate directions
Even before this week’s stock market gyrations, which were kicked off by a sharp decline on Monday, many investors and pundits had been loudly calling for a correction. Indeed, the market‘s rally since last year’s June low has been a dogged, low-volatility climb that appeared to break from the “risk-on/risk-off” dynamic that has governed asset markets in the aftermath of the financial crisis, despite the fact that many of the same macroeconomic headwinds remain.

One ominous sign for stocks can be found not in the stock market, but in bonds, with Treasury bonds in particular finding new favor with investors since early March. Bill Gross, who manages PIMCO’s Total Return Fund, the world’s largest bond fund, has lifted its allocation to U.S. Treasuries to 33% against 28% in February — the highest it has been since July. The decline in yields suggests that the risk of deflation, or at least a slowdown in the economy, has increased.

As the following graph shows, bonds’ new-found popularity shows up in a split between the charts of the 10-year Treasury yield and the S&P 500’s level over the past month (as bond prices increase, yields decline):

Note that a drop in yields (blue line) has accompanied the stock market wobbles in mid-2011 and during the second quarter of 2013:

While I’m not convinced that a stock market correction is imminent, I do think this week is a healthy reminder that stock prices do not move only in one direction. Volatility had been remarkably muted over the past several months, and investors need to accept that this is unlikely to be the status quo on an ongoing basis.

The Motley Fool’s chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the brand-new free report “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Are Bonds Announcing a Stock Market Correction? originally appeared on Fool.com.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

From: http://www.dailyfinance.com/2013/04/18/are-bonds-announcing-a-stock-market-correction/

Why Bank of America Is Down Despite Quadrupled Profit

By Alex Dumortier, CFA, The Motley Fool

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After posting solid gains yesterday, U.S. stocks are falling hard this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.87% and 0.7%, respectively, at 10 a.m. EDT.

Bank of America still looks cheap
I’ve been a student of Finance and the financial markets for years, and yet I still fall into this trap. After reading the first part of the Reuters headline “Bank of America profits quadruple,” I immediately checked the quote page and was briefly, almost instinctively, surprised to find that the shares were down in premarket trading. I shouldn’t have been; as Howard Marks writes in the excellent book The Most Important Thing: “First level thinking says, ‘I think the company’s earnings will fall; sell.’ Second-level thinking says, ‘I think the company’s earnings will fall less than people expect, and the pleasant surprise will lift the stock; buy.'”

In other words, expectations provide the context necessary to analyze results and their impact on the share price. And so it was that B of A’s quarterly profit rose to $2.62 billion in the first quarter from $653 million in the prior year period, which worked out to $0.20 per share; alas, analysts were looking for $0.22. In addition, total adjusted revenue fell 4%.

It pays to remain focused on what matters relative to your investing style. Mimicking Marks‘ above distinction, I’d say a trader is concerned with the impact of quarterly earnings on the share price, whereas a long-term investor focuses on what earnings can tell us about a company’s future earning power. In that regard, B of A’s results look encouraging on a number of fronts: Brian Moynihan is doing a creditable job shrinking costs, and the provision for loan losses continues to decline, while capitalization ratios continue to improve.

Based on the newly released end-of-first-quarter balance sheet data, Bank of America shares are changing hands at roughly a 10% discount to their tangible book value this morning, and they still look like an attractive (i.e., underpriced) risk to me.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu and Matt Koppenheffer lift the veil on the bank’s operations, detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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From: http://www.dailyfinance.com/2013/04/17/why-bank-of-america-is-down-despite-quadrupled-pro/

Gold: The End of an Era

By Alex Dumortier, CFA, The Motley Fool

Filed under:

Stocks in Japan and Hong Kong suffered sharp losses today, and major European markets are also in the red. U.S. stocks look to be following their lead this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.8% and 0.64%, respectively, at 10:05 a.m. EDT.

Gold is losing its luster
On the back of a challenging week during which it lost $60 per ounce, gold is reeling on Monday, down more 5%, having dipped below $1,400 intraday for the first time since March 2011. Gold is a highly volatile asset, and recent downward momentum could be nothing more than a spate of volatility in a long-term secular uptrend. Still, I think Societe Generale‘s research note of April 2, titled “The End of a Gold Era,” looks increasingly prescient. The report included an end-of-year price target of $1,375, and that figure is now in sight. Ten days later, Goldman Sachs piled on with a year-end forecast of $1,450.

Bear in mind that the yellow metal was trading just below $1,600 at the publication of both reports. As the following chart for the SPDR Gold Shares ETF shows, gold has dramatically underperformed stocks so far this year:

GLD data by YCharts.

One of the reasons the metal is so volatile is that, relative to traditional asset markets (stocks and bonds), the gold market is a minnow, particularly when one considers the size of the “free float” — the amount that is actually available for trading. This quality amplified bull-market moves when sentiment was on its side; if a bear market is underway, it will do the same on the downside. And there’s plenty of potential downside left: Gold would need to decline by nearly half to achieve its inflation-adjusted average price since the price of gold floated in Aug. 1971.

If you’re looking for a safer bet than gold, The Motley Fool’s chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Gold: The End of an Era originally appeared on Fool.com.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

From: http://www.dailyfinance.com/2013/04/15/gold-the-end-of-an-era/

Should Microsoft Shareholders Begin to Panic Over Falling PC Shipments?

By Matt Thalman, The Motley Fool

Filed under:

Shares of Microsoft took investors on quite the ride this week, but even though they plummeted more than 4.42% in just one day, they still managed to end the week higher than were they began. Do investors have anything to worry about? Let’s take a look.

So what happened?
On Monday, Microsoft dropped by 0.38%, after the company announced that it was selling its IPTV business to Ericsson. The terms and price of the deal weren’t disclosed, but it was estimated to sell for somewhere between $100 million and $234 million. The IPTV unit creates software that gives wireless device manufacturers the ability to deliver television signals over the Internet.  

Tuesday came along, and shares were flying high, up 3.57%, with a few analysts crediting Microsoft’s attacks on Google for the rise. Microsoft and a number of other technology companies are claiming Google’s open-source operating system gives it an unfair advantage over the competition. The main problem is that Google gives its operating system away, and Microsoft, which charges for its operating systems, can’t compete. The EU is looking into Microsoft’s allegations against Google, but we’ll have to wait and see who wins this battle. 

Also on Tuesday, the company announced that it’s teaming up with Cisco to help customers reduce complexity while enhancing IT productivity and business agility. The partnership is currently just focused on data centers and how to improve and grow operations in that area of business.  

On Thursday, the IDC released its PC shipment figures for the first quarter of 2013, and they were terrible. Sales dropped 14% in the quarter, while analysts were expecting a decline of only 7.7%. Microsoft tumbled 4.42% on the news and sent the PC manufacturers even further down than that.  

So what now?
Year to date, Microsoft is the sixth worst-performing component of the Dow Jones Industrial Average during 2013, but based on my colleague John Maxfield‘s calculations, it’s only the 14th most shorted Dow component, which would indicate that although the stock hasn’t performed fantastically so far this year, most market participants don’t think the stock is going to crash, either. (To see John’s full list and how much of each Dow component is sold short, click here.)

Although the current trend clearly indicates that PC sales will probably continue to decline over time, it’s clear that as a whole, the market hasn’t lost faith in the company yet, and individual shareholders also shouldn’t sell at this time.

While the company is best known for its Windows operating system, that’s now become just a small piece of the modern-day Microsoft. The company has a number of different revenue streams today:

<td

From: http://www.dailyfinance.com/2013/04/14/wild-ride-for-microsoft-shareholders-this-past-w/

Sector

Revenue

Operating Income (Loss)

Windows

$5,253

$2,671

Server and Tools

$5,191

$2,129

Online Services

$893

($283)

Microsoft Business

$6,491

$4,367

Entertainment and Devices

It's Time to Buy DIRECTV Stock. Here's Why.

By Rich Smith, The Motley Fool

Filed under:

Picking the best value between two similar-seeming stocks can sometimes be tricky — but not always. In the contest between DISH Network and DIRECTV , for example, there’s simply no contest: DIRECTV stock is clearly the better value. Why?

Three reasons.

DIRECTV is cheap
Priced at just 12.2 times trailing earnings, DIRECTV stock looks like a bargain by just about every measure imaginable. First off, its P/E is less than half that of pricier DISH Network, which costs a hefty 26.7 times trailing earnings.

Valued on projected (forward) earnings, the relationship holds up, with DISH costing 15.6 times what it’s expected to earn next year, but with DIRECTV selling for less than 10 — a valuation cheaper than most stocks in the Dow Jones Industrial Average .

And if the discount narrows a bit when considering free cash flow rather than GAAP net income, it doesn’t disappear entirely: DISH stock sells for 16.6 times FCF. DIRECTV stock costs only 14.

DIRECTV has the best record — and the best prospects
DIRECTV stock looks great in the rearview mirror, and even better when viewed through the windshield. Over the past five years, DIRECTV grew its annual sales twice as fast as its satellite-TV rival — 11.6% per year on average, versus DISH‘s 5.2%. Going forward, earnings are expected to grow even faster than sales have in the past, with most analysts agreeing that DIRECTV will post compound annual earnings growth of 14.2%, versus DISH‘s plodding pace of just 5.2%

DIRECTV pays you best
Perhaps most important to investors, though, is that in getting a great deal on price, they’re not giving up anything on quality. Even though DIRECTV stock costs so much less than DISH, the stocks’ free cash flow yields are nearly identical. In fact, DIRECTV‘s is slightly superior to DISH‘s.

Measured by dividing a company’s market capitalization (the price you pay for DIRECTV stock) into its free cash flow (the money your investment generates for you), DIRECTV offers investors a slightly superior “free cash flow yield” to DISH‘s. For every dollar you invest in a share of DIRECTV stock today, you can expect the company to generate nearly 6.25 cents’ worth of real, cash profits on your investment.

DTV Free Cash Flow Yield data by YCharts.

DIRECTV may ultimately use this cash to begin paying a dividend, to buy back shares (increasing the size of your stake in the company for every share it takes off the table), or to reinvest in its business and maintain its lead over DISH for years to come. Any way you look at it, though, DIRECTV‘s ability to generate cash offers investors a great reason to invest.

And that, Fools, is the reason I think now’s a great time to buy DIRECTV stock.

The Motley Fool’s chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the brand-new free report:

From: http://www.dailyfinance.com/2013/04/14/its-time-to-buy-directv-stock-heres-why/

Next Week's Earnings: Handicapping the Bull

By Alex Dumortier, CFA, The Motley Fool

Filed under:

The S&P 500 and the narrower, price-weighted Dow Jones Industrial Average just recorded their best weekly performances of the year. The S&P 500 is now up 11.4% on the year.

Not surprisingly, then, the VIX , Wall Street‘s fear gauge, plumbed its lowest level since March 15 on Friday, even dipping below 12 on an intraday basis. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

The earnings drum is beating
As I’ve argued several times in this column, the rally that began off last year’s June low is being driven by valuation, rather than earnings, with the market willing to pay a higher multiple for a dollar of earnings, as investor risk aversion continues to dissipate. There are good reasons for this — to a certain extent — as fears of global macro dislocations have receded. However, I think it’s worth sounding a few words of caution.

At a price-to-earnings ratio of 14.3, the S&P 500 may not look expensive on the basis of 2013 operating earnings per share; however, that figure masks the range of valuations across the different sectors. In a yield-starved environment, investors have been snapping up shares that pay rich dividends, and that enthusiasm is reflected in the P/E multiples of the consumer staples, telecoms, and utilities sectors, at 17.4, 19.7, and 16.4, respectively.

Furthermore, I continue to believe that the S&P 500’s current forward multiple understates how expensive it really is. Consider that the 14.3 P/E assumes that operating earnings per share will rise nearly 15% year-on-year in 2013. That figure strains credulity; 2012 growth was 0.4%. On this point, first-quarter earnings will provide us with some clues either way, and we have a heavy week ahead of us in terms of earnings announcements, with nearly 15% of the companies in the S&P 500 reporting quarterly results, including more than a third of the Dow components — 11, to be exact:

  • Tuesday: Coca-Cola, Johnson & Johnson, Intel
  • Wednesday: Bank of America, American Express
  • Thursday: IBM, Microsoft, UnitedHealth Group, Verizon
  • Friday: General Electric, McDonald’s

If you’re ready to invest based on competitive advantage, long-term value creation, and valuation, The Motley Fool’s chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the brand-new free report: “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Next Week’s Earnings: Handicapping the Bull originally appeared on Fool.com.


Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn.

The Motley Fool recommends American Express, Coca-Cola, Intel, Johnson & Johnson, McDonald’s, and UnitedHealth Group and owns shares of Bank of America, General Electric, Intel, IBM, Johnson

From: http://www.dailyfinance.com/2013/04/14/next-weeks-earnings-handicapping-the-bull/

What to Watch for From the Dow's Earnings This Week

By Dan Carroll, The Motley Fool

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Earnings season is in full swing, and a full third of the companies on the Dow Jones Industrial Average are set to report last quarter’s data this week. From consumer-goods giants such as Coca-Cola to health-care staples such as Johnson & Johnson, seemingly every sector of the blue-chip index is on pace to capture investors’ attention in the next few days. Let’s look at what you should be watching out for as America’s most prominent stocks face their biggest test of 2013.

What should you look out for?
The Dow’s week of earnings starts off with Tuesday’s slate, as Intel , Coke, and J&J report on their most recent quarters. Intel’s had a tough time recently with the PC market‘s decline, and analyst expectations for both the company’s revenue and earnings are down from a year ago. The company’s done its best to diversify, reaching out to the fast-growing mobile market while advancing into new fields such as Internet TV, but don’t expect to see the fruits of Intel’s diversification efforts show up this early. For now, this is still a company stuck with its ties to the falling PC industry.

Analysts expect better EPS results from J&J and Coke, however: Projections for the two companies’ earnings average year-over-year growth of 2.2% and 2.3%, respectively. Coca-Cola’s steadily advanced overseas despite fighting against regulatory hurdles and legislation at home, promoting its iconic brand around the globe in an effort that should help this stalwart company’s future. Although analysts project slightly lower revenue from the company, Coca-Cola looks to be on good footing for the long term.

Financials take center stage on Wednesday, as both Bank of America and American Express report earnings. Analysts expect earnings per share from these companies of $0.22 and $1.22, respectively; B of A’s projected earnings represent significant year-over-year growth over last year’s $0.03 mark. Financial firms have done well recently — B of A has been one of the Dow’s top risers over the past year — but consumer spending has been shaken by the payroll-tax holiday expiration earlier this year, along with sequestration. On Wednesday, we’ll be able to see just how much these events have affected consumer-oriented companies such as American Express. While the company’s earnings are expected to grow around 5% over last year, tightening consumer wallets could put a dent in AmEx’s results.

Thursday brings three more companies up to bat, with UnitedHealth Group , IBM, and Verizon to the forefront. UnitedHealth provides a particularly interesting report to watch as the company shifts toward the full arrival of Obamacare next year. Analysts expect a drop in the company’s earnings to $1.14 per share this quarter, down from $1.31 a year ago. Still, UnitedHealth has done a good job growing its subscription base and advancing internationally, two trends that should bolster its numbers. IBM and Verizon, on the other hand, are both expected to post year-over-year EPS gains for

From: http://www.dailyfinance.com/2013/04/14/what-to-watch-for-from-the-dows-earnings-this-week/

3 Dow Bellwethers Clear Their Paths to Greatness

By Alex Planes, The Motley Fool

Filed under:

On this day in economic and business history …

Three of the Dow Jones Industrial Average‘s most closely watched bellwethers enjoyed key victories over longtime foes on April 14, 1992, clearing the way for market dominance. One had been a member of the Dow for less than a year, and two others wouldn’t join the index until later in the decade, but the events of that day had wide-ranging repercussions for two vitally important global industries.

Big labor loses big
On April 14, 1992, the same day its future Dow compatriot beat back Apple‘s legal assault, Caterpillar gained a critical victory against the United Automobile Workers union. More than 12,000 workers stopped picketing Caterpillar’s Peoria, Ill., plant, despite having called the company’s offer “a mean-spirited proposal” up until the end of the strike. The five-month action was the first in a series of major union efforts against the heavy-equipment manufacturer, and the UAW‘s capitulation in the spring of 1992 set the tone for the strikes yet to come.

The New York Times writes of Caterpillar’s bold (and boldly anti-union) move, which probably cowed union leaders into submission:

The company’s threat to replace the 12,600 striking UAW members permanently if they failed to report to work by April 6 was widely seen as a new stage in the attack on unions by corporations. Never before had an industrial giant like Caterpillar tried to permanently replace thousands of union workers.

Caterpillar and the UAW clashed over the union’s demand to have top employees earn $40,000 per year, a wage matching that promised to employees rival equipment maker Deere beginning in 1994. Caterpillar, on the other hand, claimed that the higher wages would damage its international competitiveness — at the time, it was the second-largest industrial exporter in the country, with 59% of its products shipped overseas. The UAW didn’t get its request, and the stage was set for a lengthier strike in 1994. By the time this grueling 17-month protest was over, Caterpillar had refocused its domestic manufacturing strategy around southern states with more favorable labor laws.

Today, Caterpillar is a truly global manufacturer, with nearly half of about 240 manufacturing plants located outside the United States. Its Peoria plant is still open, and Caterpillar still maintains significant manufacturing operations in Illinois, but the UAW‘s presence has been greatly diminished within the ranks of the company’s employees. In early 2011, the UAW signed a six-year contract with Caterpillar that would cover fewer than 10,000 employees at plants in four states. Since Caterpillar maintained more than four times as many domestic employees at plants in more than half of the United States at that time, this had a muted impact on the company compared with the strikes of the 1990s.

Unlocking the genomic code
The Human Genome Project raced ahead of schedule to announce the sequencing of a complete human genome on April

From: http://www.dailyfinance.com/2013/04/14/3-dow-bellwethers-clear-their-paths-to-greatness/

Collapse, Consolidation, and Accidental Greatness

By Alex Planes, The Motley Fool

Filed under:

On this day in economic and business history …

On April 14, 2000, all but the most hopeless optimists probably sensed that the era of endless dot-com gains was finally over. That day, a four-day streak of losses became a five-day market rout as investors reacted to unexpected growth in consumer prices by selling off en masse.

The Dow Jones Industrial Average lost 616.23 points — a 5.7% plunge — narrowly avoiding a 700-point drop but nevertheless setting what was then an all-time record for losses in terms of points. The losses became so bad so quickly during the day’s trading that circuit breakers tripped at the New York Stock Exchange, leading us to wonder how much worse the drop might have been without this protection. The once red-hot Nasdaq Composite collapsed, losing more than 9% in its largest one-day drop on record, capping a week that had shaved off a full quarter of its value. Over the course of the week, investors in American stocks lost $2 trillion in total wealth.

As is often the case at the beginning of a serious bear market, some traders and pundits found it hard to believe that the crash was closer to its beginning than to its end. Brian Finnerty of C.E. Unterberg Towbin told CNN, “They’re selling the good with the bad because they can … and that’s irrational, but that’s also when a bottom is formed.” Bill Meehan of Cantor Fitzgerald said: “I think you’ll see healthier and broader advances in the market. Now is the time for optimism.”

They were, of course, very wrong. The stock slide continued for more than two years, reducing the Dow’s value by nearly 30% more and absolutely destroying the Nasdaq, which collapsed another 66% before finding its real bottom. The Dow eventually recovered, but the Nasdaq never did — its April 14, 2000, closing value of 3,321.17 remains higher than any closing value reached in the subsequent decade.

A patented breakfast product
Kellogg can trace its origins to 1894, when Dr. John Harvey Kellogg and Will Keith Kellogg invented corn flakes by accident. That invention gained legal legitimacy on April 14, 1896, when the U.S. Patent Office granted Dr. Kellogg a patent for the new “flaked cereal.” For several years, the two brothers tried to market the product together under the banner of the Sanitas Nut Food Company, which defended the corn-flake patent vigorously against imitators.

Dr. Kellogg formed Sanitas — possibly named after the Battle Creek Sanitarium in Michigan, where corn flakes were invented — in 1899 and brought brother Will on to help manage the business, which would sell the cereal through mail order. A number of copycats sprang up, so numerous that more than 40 factories were thought to be operating near the Battle Creek Sanitarium making similar breakfast cereals by 1902. In 1903, the

From: http://www.dailyfinance.com/2013/04/14/collapse-consolidation-and-accidental-greatness/

The World's Top Bank Tells Investors to Shun Gold

By Doug Ehrman, The Motley Fool

Filed under:

For the second time this year, Goldman Sachs slashed its forecasts for gold prices for both 2013 and 2014, adding to the pressure on gold prices lately. So far, 2013 has seen the Dow Jones Industrial Average up nearly 11%, the S&P 500 up nearly 9%, and gold prices down more than 5%. Even with the global and U.S. economies continuing to show signs of weakness, gold prices have moved very little since late 2011. Given the negative view that Goldman is taking of gold, the bank now suggests shorting the commodity. While I don’t see things for gold as being quite that weak, significantly reducing your exposure to gold seems prudent.

Gold Price in U.S. Dollars data by YCharts.

Goldman’s case against gold
In the current round of price reductions, Goldman lowered its average price per ounce outlook for 2013 from $1,610 to $1,545. The investment bank now sees the price contracting to $1,350 in 2014, which is a significant reduction from the $1,490 price target it once held. For the rest of the year, Goldman sees plenty of negative pressure: “While there are risks for modest near-term upside to gold prices should U.S. growth continue to slow down, we see risks to current prices as increasingly skewed to the downside as we move through 2013. In fact, should our expectation for lower gold prices continue to prove correct, the fall in prices could end up being faster and larger than our forecast.”

One of the potential catalysts for the above-mentioned increased decline is an accelerating deterioration in investor confidence. A great number of gold investors piled into the commodity on a speculative basis to not miss the expected move. As prices continue to stagnate and fall, investor capital is likely to look for greener pastures more and more quickly. As speculative positions are unwound and more stop-losses at triggered, the move lower could be sharp.

Spikes lower are actually a hallmark of commodities. Prices usually trend gradually higher, or even sideways, but when moves lower happen, they tend to be violent and expensive. This is one of the reasons so much risk is often associated with commodities trades — the move lower can occur before you have a chance to get out. Owning shares of ETFs such as the SPDR Gold Trust can mitigate some of this risk, but large speculative positions in GLD may have contributed to gold’s run, making the relative protection of the ETF somewhat diminished.

Is there safety in miners?
For an extended period, gold miners such as Barrick Gold have underperformed the pure commodity play. Over the past year, Barrick is down more than 40%, while GLD is down about 7%. Over the long term, you would expect this relationship to normalize, meaning miners should outperform at some point. When this happens, however, there’s no guarantee that either investment will be headed higher — the miners

From: http://www.dailyfinance.com/2013/04/14/the-worlds-top-bank-tells-investors-to-shun-gold/

Is the Dow Leaving Small Caps in the Dust?

By Dan Caplinger and Mike Klesta, The Motley Fool

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While the Dow Jones Industrial Average keeps hitting record highs, small-cap growth has recently slowed. Is it time to avoid small caps, or should they have a place in portfolios?

In the following video, markets analyst Mike Klesta talks with Fool contributor Dan Caplinger about opportunities in small-cap stocks and ways to diversify.

To learn more about a few ETFs that have great promise for delivering profits to shareholders in a recovering global economy, check out The Motley Fool’s special free report “3 ETFs Set to Soar During the Recovery.” Just click here to access it now.

The article Is the Dow Leaving Small Caps in the Dust? originally appeared on Fool.com.

Fool contributor Dan Caplinger, Mike Klesta, and The Motley Fool have no position in any of the stocks mentioned. 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.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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From: http://www.dailyfinance.com/2013/04/13/is-the-dow-leaving-small-caps-in-the-dust/

Hope's High with Home Depot Stock and These 2 Other Companies

By Rich Duprey, The Motley Fool

Filed under:

Flying in the face of lower March retail sales and plunging consumer confidence, Home Depot‘s stock advanced 2.5% yesterday and singlehandedly kept the Dow Jones Industrial Average from falling. In the end, the index closed the day at 14,865, virtually unchanged from the day before.

Yet it wasn’t anything the big box, do-it-yourself shop did on its own that really sparked the rally. Instead it was an analyst upgrade from Jeffries along with an IPO filing by its former wholesale supply business, HD Supply. The latter is probably the larger reason behind the jump in stock, as the proposed $1 billion IPO would place a few coins in Home Depot‘s pocket, since it retained a 12% ownership stake in the business after private equity bought it for $8.5 billion in 2007.

The supply business is a vestige of the horrendous period of empire-building engendered by former CEO Bob Nardelli, a ruinous time where the board of directors, stuffed with his cronies from General Electric, stood by and watched him crush shareholder value. There’s since been a welcome change in leadership, and Home Depot has gone on to become a responsible corporate citizen once more, with shares up 20% in 2013 alone and more than 50% higher than where they stood a year ago.

The HD Supply offering could put even more money in Home Depot‘s bank account since the supply house hasn’t determined the number of shares it will actually offer, meaning the IPO could ultimately be much larger than $1 billion, increasing its value to the Big Orange Box.

Lethargic networks
As Home Depot rose in value over the past year, Active Network , an online event-management service, has been going in the opposite direction, suffering a yearlong decline that’s resulted in the loss of 70% of the company’s value. Yesterday, though, it went in the other direction, jumping more than 10% after announcing that it will soon be reporting its earnings.

Hardly seems a reason for such a response, considering expectations are that growth will slow this year even if losses will narrow. Yet it also announced an expansion of its partnership with Ironman, an international participation-sports challenge organization that grew from a single race to some 190 events. Active will provide Ironman with a seamless global platform for activity participation and registration.

Perhaps the combination of the two announcements gives investors hope that it will finally be able to reverse its yearlong slide.

Dance card filling up
Can a deal finally be at hand that allows InterOil to deliver on the expectations it’s promised investors for so long? We’ve been waiting more than a month for the Papua New Guinea oil-exploration specialist to decide whom it will partner with. The government of the tiny oil outpost demanded that it be a “supermajor” oil company (at the same time it was extracting better terms for itself) as a way of guaranteeing that the oil will

From: http://www.dailyfinance.com/2013/04/13/hopes-high-with-home-depot-stock-these-2-other-com/

The Dogs of the Dow Beat Their Index This Week

By Dan Dzombak, The Motley Fool

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“Dogs of the Dow” is the name of one of the simplest dividend strategies for beating the market. Over the coming year, I’ll track the Dogs’ performance and keep you abreast of news affecting these companies.

The strategy
The Dogs is an investing strategy that buys and holds equal dollar amounts of the 10 best-yielding dividend stocks of the Dow Jones Industrial Average . The strategy banks on the idea that blue-chip stocks with high yields are near the bottom of their business cycle and should do much better going forward. Investors in the strategy then would get not only large dividends but also gains in the stocks underlying those dividends.

High-yield dividends
High-yield portfolios are often dismissed as inferior to their growth counterparts for various reasons:

  • Many people fear that increasing dividend yields mean lower portfolio returns.
  • Others believe that dividend payments mean that management believes the business is done growing.

Evidence compiled by Tweedy Browne refutes these falsehoods. Research shows that portfolios of high-yield dividend stocks outperform lower-yielding portfolios and the market in general. In fact, a study by noted finance professor Jeremy Siegel found that over 45 years, the highest-yielding 20% of S&P 500 stocks outperformed the S&P 500 by three times! The highest-yielding stocks turned a $1,000 investment in 1957 into $462,750 by 2002, compared with $130,768 if the same money was invested in the index.

Performance
After beating the Dow by 6.8% in 2011, the Dogs underperformed the Dow by 0.2% in 2012.

Check out the Dogs’ performance in 2013 so far:

Company

Initial Yield

Initial Price

YTD Performance

AT&T

5.34%

$33.71

17.33%

Verizon

4.76%

$43.27

20.15%

Intel 

4.36%

$20.62

6.23%

Merck

4.20%

$40.94

16.18%

Pfizer

3.83%

$25.08

23.37%

DuPont 

3.82%

$44.98

11.75%

Hewlett-Packard

3.72%

$14.25

47.60%

General Electric 

3.62%

$20.99

12.68%

McDonald’s 

3.49%

$88.21

18.39%

Johnson & Johnson 

3.48%

$70.10

18.98%

Dow Jones Industrial Average

 

13,104

13.44%

Dogs of the Dow

   

19.27%

Dogs Return vs. Dow (Percentage Points)

   

+5.83%

Source: S&P Capital IQ as of April 12.

This week the Dow Jones Industrial Average was up 2.06%. The Dogs rose more than the Dow, moving up 2.32 percentage points. That brings the Dogs’ outperformance up to 5.83 percentage points better than the Dow.

The big news affecting the Dow this week was the release of the minutes from the Federal Open Market Committee’s March 20 meeting. The minutes were to be released at 2 p.m. ET on Wednesday but instead came before the market open after it was discovered a staffer had accidentally sent out an email to congressional staffers and lobbyists early with details of the release.

The

From: http://www.dailyfinance.com/2013/04/13/the-dogs-of-the-dow-beat-their-index-this-week/

Aloca's Stock Loses Luster Along With Gold

By Rich Duprey, The Motley Fool

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Following a week that saw the Dow Jones Industrial Average gain 275 points despite horrendous economic data, the index closed out Friday unchanged from the day before. The biggest loser on the day, however, was aluminum producer Alcoa‘s  stock, which pulled back 1.2%, putting it within striking distance of its 52-week lows again.

Although I’ve been (incorrectly) calling a top for a while now, perhaps it was the lack of consumer confidence as measured by the University of Michigan’s survey that finally did in the index’s inexorable climb. The survey plunged to 72.3 from 78.6, the lowest level in nine months, and said to be the biggest miss to expectations in the survey’s history. Of course, retail sales for March also fell, adding to the drumbeat of negativity we’ve seen, which is why the stock market‘s continued rise is so incongruous. Apparently the Federal Reserve‘s pumping of tens of billions of dollars into the economy, along with Japan‘s recent opening of the floodgates, is all that’s necessary to artificially levitate the markets.

I maintain it’s all going to end badly, and sooner rather than later. In the meantime, commodities are getting crushed, and gold has officially reached bear-market territory, but Alcoa’s own earnings — and not just macroeconomic issues — have played a role in its performance since they were released. It may have beaten estimates for profits, but revenues came in weak and guidance seemed a head-scratcher, leading analysts to question whether the aluminum producer wasn’t wearing rose-colored glasses.

Commodities crushed
Since Alcoa’s unofficial kickoff to the earnings seasons, its stock is down 2%. Yet year to date it’s off 5%, a wide divergence from the overall performance of the Dow, which is up 13%, and that’s just a torrid pace that can’t be maintained.

As I mentioned before, though, gold is now in bear territory, having fallen 21% from its peak. It fell more than $63 an ounce on Friday, or more than 4%, to close trading at just over $1,500 an ounce (intraday it was as low as $1,480 an ounce). That’s a level it hasn’t seen since July 2011, as traders seek better returns elsewhere.

The consequence, however, is that precious-metals miners and streamers are being taken down, too. The world’s largest gold miner, Barrick Gold tumbled 9% yesterday, but it has the added problem of having its huge Pascua-Lama project in Chile being placed on hold as it looks at delays measured in months (at least) before it’s able to start up again.

The worst performer in the sector was NovaGold Resources , which fell 13% yesterday as it scrambles to make sense of its Donlin Gold project in Alaska, the biggest known undeveloped gold deposit anywhere. The joint venture with Barrick has essentially been in limbo since NovaGold’s partner said last year it no longer made economic sense to pursue it.

About the only positive thing the miner can hang its hat on

From: http://www.dailyfinance.com/2013/04/13/alocas-stock-loses-luster-along-with-gold/

The Big Business of the Boston Marathon

By Nicole Seghetti, The Motley Fool

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The world’s oldest annual marathon gets under way this weekend. It’s a big event for the runners, but it’s also a huge one for the city of Boston and numerous companies. How much does the marathon really cost and, more important, how can investors get a piece of the action?

Physically (and fiscally) fit
A half-million spectators will witness more than 20,000 Boston Marathon runners strut their stuff on the famed course through Beantown on Monday.

Source: Wikimedia Commons.

Most Boston Marathoners gain eligibility to run the race by having completed a qualifying marathon in a certain amount of time. For example, a female runner between the ages of 45 and 49 would need a sub-four-hour qualifying time to run at Boston. But runners who don’t qualify under the time limit can still participate through a charity, by raising about $3,000 for their cause. That just gets your tired feet in the door.

In addition to the $150 entry fee for U.S. residents ($200 for international residents), runners must spend money on travel, lodging, and dining. Of course, runners can’t forget to pack essential running shoes and apparel. In all, a U.S.-based marathoner can anticipate spending $1,000 to nearly $3,000 to participate in the Boston Marathon. An internationally based runner will spend more. Assuming a $2,500 average tab per runner means $50 million will change hands as a result of this year’s race!

Even though we mere mortals will instead fill this weekend with activities of the couch-potato persuasion, we can still profit by investing in products used in the marathon.

On your mark
For starters, even the best runners often need medical attention during the race. The shoes that Flash swore he broke in weeks ago may rub him the wrong way at mile 13. And as runners gloriously cross the finish line, despite the endorphin rush, they’ll still feel pain.

Patching up runners’ annoying blisters, sore joints, and aching muscles will probably come from Johnson & Johnson and Pfizer products. For more than 125 years, J&J has brought relief to millions of consumers with its Band-Aids, Tylenol, and Bengay. Pfizer’s Advil is the No. 1-selling branded over-the-counter pain reliever, and its ThermaCare Heatwraps make heat therapy portable and long-lasting. And these two Dow Jones Industrial Average bellwether stocks both pay greater than a 3% dividend yield.

Running-apparel and shoe makers Nike and Under Armour are also likely beneficiaries of the race. Nike not only holds an enviable spot as the global market leader, but it also boasts the right strategy and investments to sustain its top position. Meanwhile, newer kid on the block Under Armour has evolved into a major player in the global athletic footwear and apparel market.

Not to be outdone, lululemon athletica , originally known for its pricey yoga pants, now flaunts lines of running gear targeted toward both sexes. Enjoying $1,900 in sales per square foot, its stores make Lululemon one of the United

From: http://www.dailyfinance.com/2013/04/13/the-big-business-of-the-boston-marathon-2/

Dow Takes a Break After a Strong Week

By Jeremy Bowman, The Motley Fool

Filed under:

After four straight days of gains, the Dow Jones Industrial Average took a breather today, finishing the session unchanged at 14,865, though it was down all session, at one point by as much as 0.5%. The S&P 500 and Nasdaq both declined slightly.

Disappointing retail sales numbers from March seemed to cool off this week’s rally, especially after some strong results from individual retailers yesterday. Sales at the consumer level dropped by 0.4%, its worst performance in nine months, with no expectations of any change, while a separate consumer confidence report also showed poorer results than expected. The combination of federal budget cuts through sequestration and an increase in the payroll tax seems to be weighing on consumer spending habits. The Producer Price Index was also off by 0.6%; however, the core rate, which excludes the volatile food and energy categories, was up 0.2%. While a long-term drop in prices is generally bad for the economy, a short-term decline can help spur consumption. The numbers also indicate that inflation continues to be well under control.

JPMorgan Chase finished down 0.6% after reporting earnings this morning. A slowdown in lending hampered the nation’s No. 1 bank by assets, as well as rival Wells Fargo , which also reported earnings this morning. Both banks topped earnings estimates, but did so on cost-cutting rather than strong revenue growth. Wells delivered EPS of $0.92, while JPMorgan had an adjusted per-share profit of $1.41.

Home Depot was today’s big winner, gaining 2.4% after its former unit, HD Supply, announced it would go public with a $1-billion IPO. Home Depot remains HD Supply’s biggest customer, and the IPO seems to confirm investor belief in the continued recovery of the housing sector. The home-improvement specialist also received an upgrade from Jeffries Group to “buy,” from “hold,” after the investment research firm said that increasing housing prices and conservative guidance could provide strong upside potential in the stock.

McDonald’s was another strong gainer, moving up 1.6% after bringing back Steve Easterbrook as Chief Global Brand Officer. Easterbrook had formerly overseen McDonald’s Europe, the Golden Arches‘ biggest region, with 7,000 restaurants in 39 countries. The fast-food chain also tripled the pay for its former and current CEO, and was also receiving some negative publicity after an ad in Massachusetts came out that seemed to associate eating Big Macs with mental illness and depression. McDonald’s immediately pulled the ad.  

With big finance firms still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!

From: http://www.dailyfinance.com/2013/04/12/dow-takes-a-break-after-a-strong-week/