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After the Sell-Off: Value & Upside In Major Industrials (APD, BA, CAT, DE, DOW, DD, DHR, ITW)

Administrator — Wed, 23 May 2012 14:25:39 +0000

Summer can often be an interesting time in the markets and so far the “Sell in May and go away!” them has worked. What has also taken place is that many of these stocks have sold off to levels where they are either well off their highs or to where these offer value and upside to the consensus price targets. We have covered this in gold miners and in major oil outfits, but we are taking a look at the value and upside in many of the key industrial names which are key drivers and barometers of the U.S. economy.

24/7 Wall St. has gone through the industrial products, chemicals, and heavy equipment makers to see which outfits offer investors the least risk and most reward. Consensus targets are from Thomson Reuters and we have evaluated the following: Air Products & Chemicals Inc. (NYSE: APD); The Boeing Company (NYSE: BA); Caterpillar Inc. (NYSE: CAT); Deere & Company (NYSE: DE); The Dow Chemical Company (NYSE: DOW); E. I. du Pont de Nemours and Company (NYSE: DD); Danaher Corp. (NYSE: DHR); and Illinois Tool Works Inc. (NYSE: ITW).

Air Products & Chemicals Inc. (NYSE: APD) traded at $79.50 with a market value of $16.8 billion. The consensus target price from Thomson Reuters is $98.75 and the 52-week trading range is $72.26 to $98.00. Air Products’ most recent yield was listed as 3.2%. The implied upside to the consensus target is 24% but we would note that the consensus target is still above the 52-week high.

The Boeing Company (NYSE: BA) traded at $71.05 with a market value of $53.2 billion. The consensus target price from Thomson Reuters is $86.08 and the 52-week trading range is $56.01 to $78.35. This DJIA component’s most recent yield was listed as about 2.5%. The implied upside to the consensus target is 21% but we would note that the consensus target is almost $8.00 higher than the 52-week high and you have to go back to before the recession to find Boeing shares that high.

Caterpillar Inc. (NYSE: CAT) traded at $91.25 with a market value of $59.5 billion. The consensus target price from Thomson Reuters is $130.95 and the 52-week trading range is $67.54 to $116.95. Caterpillar’s most recent yield was listed as 2.0%. The implied upside to the consensus target is 44% but we would note that the consensus target is almost 10% above the 52-week high.

Deere & Company (NYSE: DE) traded at $74.50 with a market value of $30 billion. The consensus target price from Thomson Reuters is $92.79 and the 52-week trading range is $59.92 to $89.70. Deere’s most recent yield was listed as 2.4%. The implied upside to the consensus target is about 25% but we would note that the consensus target is about $3.00 higher than the 52-week high.

The Dow Chemical Company (NYSE: DOW) traded at $30.00 with a market value of $35.9 billion. The consensus target price from Thomson Reuters is $37.23 and the 52-week trading range is $20.61 to $37.30. Dow’s most recent yield was listed as a very high 4.2%. The implied upside to the consensus target is 24% but we would note that the consensus effectively is the same as the 52-week high.

E. I. du Pont de Nemours and Company (NYSE: DD) traded at $48.40 with a market value of $45.3 billion. The consensus target price from Thomson Reuters is $58.33 and the 52-week trading range is $37.10 to $56.20. DuPont’s yield was listed as about 3.5%. The implied upside to the consensus target is 20% and that target is about $2.00 above the 52-week high.

Danaher Corp. (NYSE: DHR) traded at $51.85 with a market value of $35.9 billion. The consensus target price from Thomson Reuters is $60.95 and the 52-week trading range is $39.34 to $56.45. Danaher’s most recent yield was tiny at only 0.2%. The implied upside to the consensus target is only about 17% and it is worth noting that the analyst consensus target is more than $4.00 above the 52-week high.

Illinois Tool Works Inc. (NYSE: ITW) traded at $54.40 with a market value of $26 billion. The consensus target price from Thomson Reuters is $61.53 and the 52-week trading range is $39.12 to $59.27. ITW’s most recent yield was listed as 2.6%. The implied upside to the consensus target is only about 13%, making this the least ‘implied upside’ winner of the lot. This one is also only down about 8% from its most recent high as well.

You can see that there is a very mixed bag here. The Dow Chemical Company (NYSE: DOW) leads in the dividend department with a 4.2% yield. Caterpillar Inc. (NYSE: CAT) is the leader with ‘implied analyst upside’ of 44% but it seems a stretch in the upside if you look at where the stock has been and how volatile the stock has been. Illinois Tool Works Inc. (NYSE: ITW) has the least amount of ‘implied analyst upside’ but it has also held up among the best during the market sell-off.

Gold & Silver Miners With Most Upside & Value

Major Oil Companies WIth Most Upside & Value

Conglomerates With Most Upside & Value

JON C. OGG

Filed under: Dividend, Economy, Industry, Infrastructure, Value Investing Tagged: APD, BA, CAT, DD, DE, DHR, DOW, ITW

Sell In May And Go Away? A 2012 Primer (BAC, JPM, GE, AA, CAT, MSFT, INTC, AAPL, XOM, CVX, DD)

Administrator — Thu, 26 Apr 2012 11:08:19 +0000

It is that time of year again. It is time to ponder the theory of pricing in a summer slowdown, whether it actually happens or not. In short, is time to “Sell in May and go away?” 2012 could be different. After all, this is an election year and it is not as though the U.S. is in the same spot it was in during the 2008 election. 2012 also faces the challenges of the larger European nations, as well as very sluggish reports from the growth markets of China, India, and South America.

Many investors might actually hope that we do get a 10% correction so that they can get into stocks again. Recent reports have shown that the average investor has still shied away from stocks in favor of the safety of bonds. The DJIA peaked above 13,300 in March after having ended 2011 at 12,217.56. It is hard to imagine this, but the DJIA had a low of under 6,500 in early 2009 at the peak of the panic selling. That was back to 10,000 by October of 2009 and the market is above 13,000 at the current time. Is it possible that the DJIA has really doubled from the lows and Joe Public has not participated at all?

We want to take a look at the valuations, dividend yields, performance, and underlying trends driving some of the key industry leaders which have already reported earnings and offered guidance in order to get a better handle on what to expect for the coming summer.

Chrysler is also acting as a strong barometer for U.S. auto sales, even if the highly-volatile durable goods orders have been weak for two months. While the retail segment is marred by a couple of undercurrents right now, sales have remained positive in 2012 when some were expecting some negative overall numbers. Now we also have a fresh report calling for at least 8% dividend growth from DJIA stocks this year and the components have so far been hiking dividends above what was expected.

We have taken a look at the following: Bank of America Corporation (NYSE: BAC) and J.P. Morgan Chase & Co. (NYSE: JPM) in banking; General Electric Co. (NYSE: GE) as the conglomerate leader (and economic barometer); Alcoa Inc. (NYSE: AA) as a leading indicator of the metals markets; Caterpillar Inc. (NYSE: CAT) as the construction and super-heavy equipment leader; Microsoft Corporation (NASDAQ: MSFT) and Intel Corporation (NASDAQ: INTC) as the tech leaders; Apple Inc. (NASDAQ: AAPL) not as a DJIA component but as an asset class; and Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) as the American leaders in Big Oil. We also want to consider E. I. du Pont de Nemours and Company (NYSE: DD), or DuPont,

A Recent History of “Sell In May and Go Away”

2009 was a very different year because the market was recovering from the crash and stocks were still benefitting from that move. 2010 was a nasty start of summer as investors worried about a double-dip recession as housing prices continued to sink and unemployment was still a prime concern. We also faced that punishing event called ‘The Flash Crash.’ Another big distraction was BP PLC (NYSE: BP) for its disaster in the Gulf and America and the rest of the world was starting to consider some problems in nations called the PIIGS. The market peaked around 11,300 in late April and had sunk to a 9,800 by early May. Even around July 6 the DJIA was only around 10,200 and was only back up to almost 10,500 after the end of August around Labor Day.

2011 felt close to a repeat of 2010 with the worries not just about the PIIGS but about the possibilities of a U.S. debt rating downgrade which did ultimately come. Housing was still in the tank and employment was not yet in a full-blown recovery in America. While the end of April to the end of May did see a drop of 800 points in the DJIA from almost 12,900 in late April and early May to just above 12,000 by late May and 11,900 by late June, it was late-July and August which were the cruel months for the DJIA as companies began to suffer serious earnings concerns. The DJIA bottomed out just under 10,600 in August. By late-October the market was back above 12,000 again.

So, here we sit at the end of April in 2012 with a long road of political hate ahead of us, and an economy that is still sluggish but one which not go into recession. Right now the labor data is still choppy even though unemployment is down to 8.2% due to lower labor force participation rates. Earnings growth has slowed down and Europe remains a key concern with the stable European nations being a concern on top of the PIIGS. The good news is that equity values remain attractive and the FOMC is still pledged to a policy of maintaining an “exceptionally low rate policy” through the end of 2014.

The Leading Companies As Economic Barometers

Bank of America Corporation (NYSE: BAC) and J.P. Morgan Chase & Co. (NYSE: JPM) are the two DJIA money-center banking leaders and they are both at discounts to their respective book values. Both banks turned in earnings reports that show some stabilization even if mortgage woes remain a hangover from yesteryear. 2012 has also been a period of incredible recovery from an awful 2011. Bank of America effectively doubled from trough to peak from late 2011 to the end of the first quarter and at $8.26 it has a consensus analyst target of effectively $10 that implies upside of close to 21%. J.P. Morgan is around $43 it has risen 35% from trough to peak from late 2011 to the present time. Its dividend yield is back up to almost 3% and the price target of about $52.80 implies upside of almost 23%.

Filed under: Banking, Compensation, Conglomerates, Consumer Goods, Corporate Governance, Dividend, Earnings, Economy, Editor's Picks, Index, Infrastructure, International Markets, Labor & Unions, Large Cap Stocks, Personal Finance, Transports Tagged: AA, AAPL, BAC, BP, CAT, CVX, DD, GE, INTC, JPM, MSFT, XOM

Top DJIA Earnings Previews For The Week Ahead (C, INTC, IBM, JNJ, KO, AXP, BAC, DD, MSFT, TRV, VZ, GE, MCD)

Administrator — Fri, 13 Apr 2012 17:10:22 +0000

Earnings season may be underway, but this coming week is going to be full of many key earnings reports. We actually have a full slate on deck with what appears to be 13 of the 30 DJIA components set to report earnings.

24/7 Wall St. has prepared previews on each of the 13 DJIA components as follows: Citigroup Inc. (NYSE: C); Intel Corporation (NASDAQ: INTC); International Business Machines Corporation (NYSE: IBM); Johnson & Johnson (NYSE: JNJ); The Coca-Cola Company (NYSE: KO); American Express Co. (NYSE: AXP); Bank of America Corporation (NYSE: BAC); E. I. du Pont de Nemours and Co. (NYSE: DD); Microsoft Corporation (NASDAQ: MSFT); Travelers Companies Inc. (NYSE: TRV); Verizon Communications, Inc. (NYSE: VZ); General Electric Co. (NYSE: GE); and McDonald’s Corporation (NYSE: MCD).

We have used Thomson Reuters consensus data, shown the current price and the target prices, and added in color on each if applicable.

Monday, April 16

Citigroup Inc. (NYSE: C) is due to report Monday morning and is the third money center bank to report. It was not allowed to boost its dividend. It seems as though “The Prince” may get more vocal for Citi to get to pay a higher dividend. This is at a substantial discount to its tangible book value. Thomson Reuters has estimates of $1.00 EPS and $19.85 billion in revenue.

Tuesday, April 17

Intel Corporation (NASDAQ: INTC) is up against multi-year highs with shares around $28.30 and it should be worth noting that the consensus price target from Thomson Reuters is currently at the market with a value of $28.33. Thomson Reuters has estimates of $0.50 EPS and $12.8 billion in revenue.

International Business Machines Corporation (NYSE: IBM) has a new CEO and has still been trying to fire on all cylinders while other IT-outfits have suffered. We will be watching the billions of backlog and its longer-term guidance. With shares around $204 it the current consensus of $207.35 pales in comparison to the street-high target of $230 we saw this last quarter. Thomson Reuters has estimates of $2.65 EPS and $24.77 billion in revenue.

Johnson & Johnson (NYSE: JNJ) continues to be under a cloud of recalls and at $63.50 this is down about 6% from its 52-week high now. The consensus price target is currently almost $72.00 per share. Thomson Reuters has estimates of $1.35 EPS and $16.26 billion in revenue.

The Coca-Cola Company (NYSE: KO) remains a defensive play as the market moves back and forth between risk and safety. At $72.20, the stock is barely down $2 from its 52-week high and the Thomson Reuters consensus price target is $76.75 and the consensus estimates are $0.88 EPS and $10.83 billion in sales.

Filed under: Calendar, Earnings, Economy, Editor's Picks, The Week Tagged: AXP, BAC, C, DD, GE, IBM, INTC, JNJ, KO, MCD, MSFT, TRV, VZ

Upside Potential in Basic Industrial Stocks (CAT, DD, DOW, DE, APD, EMR)

Paul Ausick — Fri, 24 Feb 2012 17:09:30 +0000

While global GDP growth is expected to be slower this year, there are a couple of areas where investment will probably continue at relatively high levels. These are mining and agriculture. New mines continue to be developed — at great cost — and the global demand for food leads to a greater demand for the machinery and chemicals that are used to produce that food.

With that in mind, we’ve looked at several companies involved in basic industries like heavy equipment, chemicals, and electrical components to try to determine if there are any value plays available to investors. The companies we examined were Caterpillar Inc. (NYSE: CAT), E.I. du Pont de Nemours & Co. (NYSE: DD), The Dow Chemical Co. (NYSE: DOW), Deere & Co. (NYSE: DE), Air Products and Chemicals Inc. (NYSE: APD), and Emerson Electric Co. (NYSE: EMR).

Caterpillar Inc. (NYSE: CAT) has a consensus target price of $131.61. At a current price this morning of $116.00, the company’s implied gain is 13.5%. Since the beginning of the year, the stock has gained more than 28%, with a 12-month share price gain of nearly 15.5%. The company’s forward P/E ratio is 10.23 and Caterpillar pays a dividend yield of 1.6%. The world’s largest maker of construction and farming machinery expects to grow EPS by 25% year-over-year in 2012 to about $9.25 and to double to as much as $20/share by 2015. Given Cat’s past success, none of this is out of reach.

E.I. du Pont de Nemours & Co. (NYSE: DD), or DuPont, has a consensus price target of $56.47. At its current price of $51.29, Dupont’s implied gain is 10%. Year-to-date shares are up about 12%, but for the preceding 12 months, the company’s stock is down more than -3%. The company’s forward P/E ratio is 10.68 and DuPont pays a dividend yield of 3.2%. DuPont is auctioning its car paint business and could reap as much as $4 billion at the time of sale. The company has struck some recent deals with Chinese solar panel makers and DuPont expects to continue increasing its sales in the agriculture, alternative energy, and other high-value markets.

The Dow Chemical Co. (NYSE: DOW) has a consensus target price of $36.92. At a current price of $34.07, the potential upside is 8.4%. Dow shares have lost about -4% in the past 12 months, though since January shares have risen more than 18%. The company’s forward P/E ratio is 9.96 and Dow pays a dividend yield of 3.0%. Like other chemical companies, Dow is getting a nice benefit from low natural gas prices. The company expects 2012 growth in all its operating divisions, with agriculture and plastics leading the gains.

Deere & Co. (NYSE: DE) has a consensus target price of $94.59. At the current price of $83.84, the implied gain is 12.8%. For the past 12 months, the stock has dropped -5.6% though shares are up about 8.5% in the new year. The company’s forward P/E ratio is 10.01 and Deere pays a dividend yield of 1.90%. In the company’s most recent quarter, EPS beat estimates, but sales were a little slower than investors had hoped for. At less than half the market cap of Caterpillar, Deere’s long-term debt is also less than half Cat’s. That gives it some flexibility, and allowed the company to offer $1 billion in 5- and 10-year notes earlier this week at coupons of 1.4% and 2.75%, respectively.

Air Products and Chemicals Inc. (NYSE: APD) has a consensus target price of $100.60. At the current share price of $92.20, the potential upside is 9%. The company’s shares posted a slight gain of 1.4% in the past 12 months, and are up more than 8% since the beginning of the year. The company’s forward P/E ratio is 13.68 and Air Products pays a dividend yield of 2.60%. One of S&P’s Dividend Aristocrats, Air Products had only a so-so quarter and doesn’t expect a lot of improvement until the second half of this year.

Emerson Electric Co. (NYSE: EMR) has a consensus target price of $56.42. At the current share price of $50.90, the potential upside for the stock is 10.8%. Emerson’s shares have lost about -14% in the past 12 months, but are up more than 9% year-to-date. The company’s forward P/E ratio is 12.80 and Emerson pays a dividend yield of 3.10%. Another of S&P’s Dividend Aristocrats, Emerson had a sub-par first fiscal quarter, but is expecting to resume sales growth both in its networking and its climate products business as bandwidth demand grows in the US and new housing construction ticks up.

Between the two equipment makers, Caterpillar has performed better over the past year and really shows no signs of pulling back. Among the chemical companies, there is no clear choice and all are pretty fully valued at this point. The make-or-break for these companies will be natural gas prices, which should rise as production of gas is cut back. Emerson is counting on a continued buildout of wireless networks and a rise in home and office building construction. Overall, Caterpillar seems to be the best choice.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Economy, Industry, International Markets Tagged: APD, CAT, DD, DE, DOW, EMR

Top Analyst Upgrades & Downgrades (ANF, AES, ALU, BUD, BHI, DD, EL, MNKD, MU, MWW, NE, NVDA, SHLD, TSCO, X, V)

Administrator — Mon, 13 Feb 2012 13:17:32 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street brokerage and research firms this Monday morning.

Abercrombie & Fitch Company (NYSE: ANF) Reiterated Buy with $70 target at Jefferies.
AES Corporation (NYSE: AES) Started as Buy at UBS.
Alcatel-Lucent S.A. (NYSE: ALU) Cut to Sell at Soc-Gen.
Anheuser-Busch InBev (NYSE: BUD) Started as Neutral at Credit Suisse.
Baker Hughes Inc. (NYSE: BHI) Cut to Neutral at Goldman Sachs.
E.I. du Pont de Nemours and Company (NYSE: DD) Started as Equal-weight at Morgan Stanley.
Estee Lauder Companies, Inc. (NYSE: EL) Cut to Neutral at Citigroup.
MannKind Corporation (NASDAQ: MNKD) Started as Overweight at Piper Jaffray.
Micron Technologies Inc. (NASDAQ: MU) Reiterated Outperform with $12.00 target at Credit Suisse.
Monster Worldwide, Inc. (NYSE: MWW) Cut to Sell at Citigroup.
Noble Corporation (NYSE: NE) Raised to Buy at Goldman Sachs.
NVIDIA Corporation (NASDAQ: NVDA) Raised to Outperform at FBR.
Sears Holding Corporation (NASDAQ: SHLD) Maintained Underperform as Bear of the Day at Zacks.
Tractor Supply Co. (NASDAQ: TSCO) Maintained Outperform as Bull of the Day at Zacks.
U.S. Steel Corporation (NYSE: X) Cut to Hold at KeyBanc.
Visa Inc. (NYSE: V) Reiterated Buy and raised target to $130 at Argus.

Read Also: The Top Analyst Calls of the Last Week

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JON C. OGG

Filed under: 24/7 Wall St. Wire, Analyst Calls Tagged: AES, ALU, ANF, BHI, BUD, DD, EL, MNKD, MU, MWW, NE, NVDA, SHLD, TSCO, V, X

11 DJIA Reporting Earnings This Week (DD, JNJ, MCD, TRV, VZ, BA, UTX, T, CVX, PG)

Administrator — Mon, 23 Jan 2012 17:56:32 +0000

This coming week is going to be yet another action packed week of big corporate earnings which will move markets or will move their sectors. 24/7 Wall St. has identified each of the DJIA components reporting this week and we have 11 of the 30 DJIA stocks on deck. Earnings are coming from the following DJIA stocks by day:

Tuesday: E.I. DuPont de Nemours & Co. (NYSE: DD); Johnson & Johnson (NYSE: JNJ); McDonald’s Corporation (NYSE: MCD); Travelers Cos. Inc. (NYSE: TRV); and Verizon Communications Inc. (NYSE: VZ)

Wednesday: Boeing Co. (NYSE: BA) and United Technologies Corporation (NYSE: UTX)

Thursday: AT&T Inc. (NYSE: T) and Caterpillar Inc. (NYSE: CAT)

Friday: Chevron Corporation (NYSE: CVX) and Procter & Gamble Co. (NYSE: PG).

We have compiled Thomson Reuters estimates, when the earnings are due, and what the share pricing has been on each, and added in additional color if applicable.

TUESDAY

E.I. DuPont de Nemours & Co. (NYSE: DD), or just DuPont, just declared its normal dividend but it reports on Tuesday morning. The chemicals giant is expected to have earnings of $0.33 EPS and $8.53 billion in revenues. Shares are just under $50.00 and the 52-week range is $37.10 to $57.00.

Johnson & Johnson (NYSE: JNJ) has news of a patent loss ahead of its earnings report due Tuesday morning. The drug, medical products, and consumer products giant is expected to report earnings of $1.10 EPS and $16.28 billion in sales. With shares close to $65.00, the 52-week range is $57.50 to $68.05.

McDonald’s Corporation (NYSE: MCD) reports on Tuesday morning and the Golden Arches’ estimates for the fast food giant are $1.29 EPS and $6.80 billion in sales. Shares are within yet another hair of another all-time high and it has recently talked up sales and has already raised its dividend.

Travelers Cos. Inc. (NYSE: TRV) is still probably the most forgotten financial stock of the DJIA components. The insurer is expected to report earnings of $1.52 EPS and $5.47 billion in sales. With shares above $61.00, the 52-week trading range is $45.97 to $64.17.

Verizon Communications Inc. (NYSE: VZ) is due to lead of the telecom sector on Tuesday morning and earnings are expected to be $0.53 EPS on $28.4 billion in revenues. With shares around $39.00, the 52-week range is $32.28 to $40.48.

WEDNESDAY

Boeing Co. (NYSE: BA) may have a boost from the rival A380 having cracks in its wings, if the rationale is not one that “all super-jumbos ar scary.” Boeing reports Wednesday morning and the aerospace and defense giant is expected to report $1.00 EPS and $19.4 billion in revenues. With shares around $75.50, the 52-week range is $56.01 to $80.65.

United Technologies Corporation (NYSE: UTX) still appears to be the conglomerate with the most upside in 2012 according to analysts and GE’s recent earnings reaction has not done much to really amp-up expectations. The earnings are due Wednesday morning and the consensus targets are $1.46 EPS and $15.07 billion in revenues. With shares under $77.00, the 52-week range is $66.87 to $91.83 and the consensus price target is $89.44.

THURSDAY

AT&T Inc. (NYSE: T) is due on Thursday morning and estimates are $0.45 EPS and $31.94 billion in sales. Shares are back above $30 around $30.40 and the 52-week range is $27.20 to $31.94.

Caterpillar Inc. (NYSE: CAT) is expected to report Thursday morning and estimates are $1.73 EPS and $16.04 billion in sales. With shares back above $105.00, the 52-week range is $67.54 to $116.55 and the consensus price target is now $115.28.

FRIDAY

Chevron Corporation (NYSE: CVX) is due with earnings Friday morning and the oil giant’s consensus estimates are $2.93 EPS and $71.08 billion in sales. With shares around $106.40, the 52-week range is $86.68 to $110.99 and the consensus price target is $124.95. Keep in mind that Chevron is the second highest weighting in the DJIA due to its high share price.

Procter & Gamble Co. (NYSE: PG) is due to post the consumer product giant earnings report Friday morning. The consensus estimates are $1.08 EPS and $22.2 billion in sales. Shares are trading around $66.10 and the 52-week range is $57.56 to $67.72 and the consensus target is $72.37.

We will be releasing more detailed previews on each of these the day ahead of each earnings report this week. Additional data will be around forward earnings estimates for guidance, what the implied valuations are, color on what to look for in addition to earnings, as well as opinions from analysts, what the charts are showing, and what the options traders are expecting for a price move.

JON C. OGG

Filed under: Calendar, Earnings Tagged: BA, CVX, DD, JNJ, MCD, PG, T, TRV, UTX, VZ

11 DJIA Earnings Previews For The Week Ahead (DD, JNJ, MCD, TRV, VZ, BA, UTX, T, CVX, PG)

Administrator — Fri, 20 Jan 2012 20:34:28 +0000

The coming week is going to be yet another action packed week of big corporate earnings which will move markets or will move their sectors. 24/7 Wall St. has identified the DJIA components reporting next week and we have 10 of the 30 DJIA stocks reporting earnings. Earnings are coming from the following DJIA stocks: E.I. DuPont de Nemours & Co. (NYSE: DD); Johnson & Johnson (NYSE: JNJ); McDonald’s Corporation (NYSE: MCD); Travelers Cos. Inc. (NYSE: TRV); Verizon Communications Inc. (NYSE: VZ); Boeing Co. (NYSE: BA); United Technologies Corporation (NYSE: UTX); AT&T Inc. (NYSE: T); Caterpillar Inc. (NYSE: CAT); Chevron Corporation (NYSE: CVX); and Procter & Gamble Co. (NYSE: PG).

We have compiled Thomson Reuters estimates, when the earnings are due, and what the share pricing has been on each, and added in additional color if applicable. There are a few additional themes we would watch: dividend coverage, how a strong dollar is impacting earnings and competitiveness, making earnings on cost monitoring while revenues may be soft, and exposure to Europe.

TUESDAY

E.I. DuPont de Nemours & Co. (NYSE: DD), or just DuPont, reports on Tuesday morning. The chemicals giant is expected to have earnings of $0.33 EPS and $8.53 billion in revenues. Shares are just under $50.00 and the 52-week range is $37.10 to $57.00.

Johnson & Johnson (NYSE: JNJ) is due Tuesday morning. The drug, medical products, and consumer products giant is expected to report earnings of $1.10 EPS and $16.28 billion in sales. With shares close to $65.00, the 52-week range is $57.50 to $68.05.

McDonald’s Corporation (NYSE: MCD) is due to report on Tuesday morning and estimates for the fast food giant are $1.29 EPS and $6.80 billion in sales. Shares are within yet another hair of another all-time high and it has recently talked up sales and has already raised its dividend.

Travelers Cos. Inc. (NYSE: TRV), the most forgotten financial stock of the DJIA, is expected to report earnings of $1.52 EPS and $5.47 billion in sales. With shares above $61.00, the 52-week trading range is $45.97 to $64.17.

Verizon Communications Inc. (NYSE: VZ) is due to lead of the telecom sector on Tuesday morning and earnings are expected to be $0.53 EPS on $28.4 billion in revenues. With shares around $39.00, the 52-week range is $32.28 to $40.48.

WEDNESDAY

Boeing Co. (NYSE: BA) is due Wednesday morning and the aerospace and defense giant is expected to report $1.00 EPS and $19.4 billion in revenues. With shares around $75.50, the 52-week range is $56.01 to $80.65.

United Technologies Corporation (NYSE: UTX) may be the conglomerate with the most upside in 2012 according to analysts. The earnings are due Wednesday morning and the consensus targets are $1.46 EPS and $15.07 billion in revenues. With shares under $77.00, the 52-week range is $66.87 to $91.83 and the consensus price target is $89.44.

Read Also: Why The DJIA Could Peak Up 12% at 13,678 in 2012

THURSDAY

AT&T Inc. (NYSE: T) is due on Thursday morning and estimates are $0.45 EPS and $31.94 billion in sales. Shares are back above $30 around $30.40 and the 52-week range is $27.20 to $31.94.

Caterpillar Inc. (NYSE: CAT) is expected to report Thursday morning and estimates are $1.73 EPS and $16.04 billion in sales. With shares back above $105.00, the 52-week range is $67.54 to $116.55 and the consensus price target is now $115.28.

FRIDAY

Chevron Corporation (NYSE: CVX) is due with earnings Friday morning and the oil giant’s consensus estimates are $2.93 EPS and $71.08 billion in sales. With shares around $106.40, the 52-week range is $86.68 to $110.99 and the consensus price target is $124.95. Keep in mind that Chevron is the second highest weighting in the DJIA due to its high share price.

Procter & Gamble Co. (NYSE: PG) is due to post the consumer product giant earnings report Friday morning. The consensus estimates are $1.08 EPS and $22.2 billion in sales. Shares are trading around $66.10 and the 52-week range is $57.56 to $67.72 and the consensus target is $72.37.

We will be releasing more detailed previews the day ahead of each DJIA earnings report this coming week. Additional data will be around forward earnings estimates for guidance, what the implied valuations are, color on what to look for in addition to earnings, as well as opinions from analysts, what the charts are showing, and what the options traders are expecting for a price move.

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JON C. OGG

Filed under: Calendar, Conglomerates, Earnings, Editor's Picks, Telecom Tagged: BA, CAT, CVX, DD, JNJ, MCD, PG, T, TRV, UTX, VZ

Natural Gas Exports Will Raise Domestic Prices (CHK, XOM, AA, DD)

Paul Ausick — Thu, 19 Jan 2012 20:04:40 +0000

The US Energy Information Administration (EIA) today released a study on the impact of domestic pricing if the US begins to export natural gas. The question has been on the minds of natural gas producers and large commercial users of natural gas, each of which has a lot at stake if natural gas prices in the US rise.

Producers like Chesapeake Energy Corp. (NYSE: CHK), Exxon Mobil Corp. (NYSE: XOM), and others support increased exports. Large consumers like Alcoa Inc. (NYSE: AA) and E.I. du Pont de Nemours & Co. (NYSE: DD) will see a sharp increase in fuel costs, and generally oppose exporting natural gas in large quantities.

According to the EIA’s summary of its full report, there are four significant impacts of increasing natural gas exports:

Increased natural gas exports lead to increased natural gas prices.

Natural gas markets in the United States balance in response to increased natural gas exports largely through increased natural gas production [from shale gas deposits].

The remaining portion [of increased gas production] is supplied by natural gas that would have been consumed domestically if not for the higher prices.

Even while consuming less, on average, consumers will see an increase in their natural gas and electricity expenditures.

It is worth noting that in point 3, the increased gas available for domestic consumption comes from fuel-switching. Electricity now generated using natural gas will be generated in coal-fired plants (mostly) and, to a lesser extent, from renewable sources.

Booming production from shale fields and expected warmer weather is sending natural gas prices lower again today, down more than -6% to $2.32/thousand cubic feet, the lowest level in 10 years.

Under any of the EIA’s scenarios, domestic natural gas prices rise, it’s just a question of how fast and how much.

Paul Ausick

Filed under: Oil & Gas, Regulation, Research Tagged: AA, CHK, DD, XOM

Which Dogs of the Dow Are Best in 2012? (T, VZ, MRK, PFE, GE, DD, JNJ, INTC, PG, MSFT, CVX, JPM, KFT, MCD)

Administrator — Thu, 29 Dec 2011 18:02:54 +0000

The lineup of the Dogs of the Dow, simply the ten highest dividend yield stocks of the thirty Dow Jones Industrial Average components, appears to be undergoing a bit of change for 2012. There is a significant horserace taking place for the number-ten spot on the 2012 Dogs. The average yield comes to about 4% depending upon the final order.

The nearly certain nine Dogs of the Dow are as follows: AT&T Inc. (NYSE: T); Verizon Communications Inc. (NYSE: VZ); Merck & Company, Inc. (NYSE: MRK); Pfizer, Inc. (NYSE: PFE); General Electric Co. (NYSE: GE); E.I. du Pont de Nemours (NYSE: DD); Johnson & Johnson (NYSE: JNJ); Intel Corporation (NASDAQ: INTC); and The Procter & Gamble Company (NYSE: PG). The horserace for the tenth spot on the Dogs is taking place among three DJIA components, with a distant fourth in the running: Microsoft Corporation (NASDAQ: MSFT); Kraft Foods Inc. (NYSE: KFT); Chevron Corporation (NYSE: CVX); and J.P. Morgan Chase & Co. (NYSE: JPM).

Here is the current expected order of the 2012 Dogs of the Dow, with dividend yields included:

AT&T Inc. (NYSE: T) 5.9%

Verizon Communications Inc. (NYSE: VZ) 5.2%

Merck & Company, Inc. (NYSE: MRK) 4.5%

Pfizer, Inc. (NYSE: PFE) 3.7%… After the most recent dividend hike which has not been paid out, the new yield will be 4.06% rather than a rounded off 3.7%.

General Electric Co. (NYSE: GE) 3.6%

E.I. du Pont de Nemours (NYSE: DD), or DuPont, 3.6%

Johnson & Johnson (NYSE: JNJ) 3.5%

Intel Corporation (NASDAQ: INTC) 3.4%

The Procter & Gamble Company (NYSE: PG) 3.14%

The four DJIA stocks competing for the tenth-spot:

Microsoft Corporation (NASDAQ: MSFT) 3.07%

Kraft Foods Inc. (NYSE: KFT) 3.08%

Chevron Corporation (NYSE: CVX) 3.03%

J.P. Morgan Chase & Co. (NYSE: JPM) 2.98%

What is so interesting about this list is that Microsoft is entering the Dogs for what may be the first time ever. McDonald’s Corporation (NYSE: MCD) is actually not in the list this year. Those which have recently raised dividends outside of Microsoft are AT&T, Merck, Pfizer, and G.E.

If you average the top nine DJIA yields, investors get an average of about 4.06%. If you include a 3.05% average for the competing four to go into the tenth spot, then the average dividend yield comes to 3.96%. As far as how this compares to the 2011 list, the lowest yield a year ago was roughly 3.1% as well.

Is it any coincidence that the average yield last year among the ten Dogs was 4.01%? Here is the 2011 Dogs of the Dow review from a year ago for comparison.

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JON C. OGG

Filed under: Dividend, Index, Shareholder Issues Tagged: CVX, DD, GE, INTC, JNJ, JPM, KFT, MCD, MRK, MSFT, PFE, PG, T, VZ

Battle Lines Drawn Over Natural Gas Exports (DOW, DD, XOM, CHK, LNG)

Paul Ausick — Thu, 22 Dec 2011 13:44:41 +0000

Natural gas prices in the US rose to more than $4.80/thousand cubic feet (tcf) in June, and have trailed off to under $3.20/tcf today. In late 2005, natural gas spot prices topped $15/tcf and in the summer of 2008, spot prices rose above $13/tcf. The collapse is entirely due to the development of shale gas.

Big users of natural gas, like chemical companies Dow Chemical Co. (NYSE: DOW) and E.I. du Pont de Nemours & Co. (NYSE: DD), want the price of natural gas to stay low. Producers like Exxon Mobil Corp. (NYSE: XOM) and Chesapeake Energy Corp. (NYSE: CHK) would like to see prices rise. And there’s at least one company that would like to help the producers boost prices — Cheniere Energy, Inc. (AMEX: LNG).

Cheniere’s original plan was to build an import facility in the Gulf of Mexico to convert liquefied natural gas (LNG) back to a gas and pipe it onshore for sale. The boom in shale gas production killed that idea, but the company’s plant at Sabine Pass is built and now the company wants to convert the plant to an export facility that would liquefy US-produced natural gas, load the LNG onto tanker ships, and send it to Japan or India or Korea where prices are nearer $13/tcf than $3/tcf.

The Wall Street Journal has a story today about resistance to Cheniere’s export plan because it would almost certainly raise domestic natural gas prices. Unlike oil, natural gas is primarily a regional product and its sale depends on pipelines connecting regional producers with regional customers. The development of liquefied gas plants has not yet had much impact on regional pricing, but if the US continues to find and develop shale gas reserves, producers will need to find additional markets.

Big consumers of domestic natural gas want the prices to remain low, and are gearing up for a campaign against US liquefaction facilities. The battle lines are being drawn over jobs, with Dow, for example, arguing that higher natural gas prices will lead to a loss of US manufacturing jobs. The energy companies argue that export facilities will create construction and production jobs.

The US Department of Energy is studying the issue and is expected to release a report in the next few weeks analyzing the effect of exports on domestic supplies and pricing. Depending on the conclusions of that report, one side will claim government interference in the market and the other will claim vindication. Stay tuned.

Paul Ausick

Filed under: Oil & Gas, Regulation Tagged: CHK, DD, DOW, LNG, XOM