While technology has been the top sector by far this year, the industrials as a whole have lagged the market dramatically. Most of Wall Street remains very positive about the balance of 2014 and next year. Still, investors with big gains in stocks may be looking for spots to take profit, especially long-term capital gains, and redeploy the money into solid companies with good upside.
The Oppenheimer market strategists have just released an in depth look at the market and the economy. They are bullish on the balance of the year and tout their “2014 on the S&P 500 in 2014” call. They also posted a chart of DJIA performers this year, and the stocks they had rated as Outperform. Five of those stocks are still negative for 2014, and may make outstanding portfolio additions.
Wal-Mart Stores Inc. (NYSE: WMT) has become a Wall Street whipping boy, and is still down over 7% year-to-date. While the company recently acknowledged that food-stamps was a contributor to earnings, they are also an expanding discount leader that will benefit from an improving economy. Plus, their increasing presence in the grocery world is adding to an already large retail footprint. A push to sell organic products is also starting to gain market share from some of the traditional leaders of that space. Investors are paid a 2.5% dividend. The Thomson/First Call consensus price objective for the stock is posted at $80.39. Wal-Mart shares closed Thursday at $73.95.
The Coca-Cola Company (NYSE: KO) is down over 5% this year despite the fact that the company is one of the most recognizable brands in the world, and its biggest shareholder is Warren Buffett. The company raised its dividend by 9% this year, its 52nd annual dividend increase. While sales growth has been sluggish recently, many Wall Street analysts believe the company is taking the right strategic action to reinvigorate revenue growth. Investors are paid a solid 2.9% dividend. The consensus target for the stock is $45.21. Coke closed Thursday at $39.35.
The Goldman Sachs Group Inc. (NYSE: GS) remains the premier investment bank on Wall Street, but has lagged the market as some other financials have — down 4.4% year-to-date. Like other big Wall Street banks, the white glove firm has seen a handy drop in their trading revenues. While still a prime purveyor of Initial Public Offerings (IPO’s) the company’s year over year revenue for the high-profile transactions is expected to drop. Investors are paid a somewhat unimpressive 1.3% dividend. Goldman Sachs’ consensus analyst estimate for the stock is at $177.68, versus a $169.10 current price.
International Business Machines Corporation (NYSE: IBM) is out of favor, and is still down 0.3% for the year. Investors with a good memory will recall this isn’t the first time the company has been out of favor. The stock is trading at just over 10 times Wall Street 2014 earnings per share projections, or a 35% discount to the S&P 500 Index. While the company has struggled with business in China, many trading models indicate that sales bottomed last year, and the path higher could be much easier. Investors are paid a 2.4% dividend and IBM remains an aggressive buyer of its own stock. The consensus price target is at $194.79. The stock closed Thursday at $184.30.
3M Company (NYSE: MMM) is another quality Industrial name that is still down for the year, a small 0.3%. The company is closely correlated to U.S. leading economic indicators. The more the indicators continue to improve, the higher the likelihood of strong earnings performance for the company the rest of the year. Investors are paid a respectable 2.4% dividend. The consensus price objective is at $153.29. 3M closed Thursday at $139.13.
All of these blue-chip stocks have lagged the market and their peers this year. Rotating some money from winners to these solid stocks could end up a smart move, especially if the underperforming industrials sector perks back up, which many expect.