Posts for Ticker ‘DJIA’

DJIA Index Changes (MO, HON, BAC, CVX)

It’s been a while since we have seen any serious changes to the Dow Jones industrial Averages components, with 2004 being the last change and 1999 before that.  This morning there are some announced changes to the components:

  • Bank of America (NYSE: BAC) and Chevron (NYSE: CVX) are being added into the index.
  • Altria (NYSE: MO) and Honeywell (NYSE: HON) are being removed from the list.   

There will probably be some criticism here for "changing an index to populist trends."  The DJIA is also a price-weighted index, although this will not result in massive changes to the index components elsewhere.  We’ll follow up with more if we make any serious determinations:

  • Deletes: HON $57.83; MO $73.09
  • Adds: BAC $42.16; CVX $79.26

It is interesting that despite the problems in the financial sector that the DJIA chose to include bank of America.  Perhaps that is a solid vote of confidence if there ever was one. Interestingly enough, Chevron used to be a component and was replaced in the 1990’s.

Honeywell is a bit of a surprise.  But Altria is actually not that surprising when you consider that it completely unloaded Kraft Foods (NYSE: KFT), is about to unload Phillip Morris International as a separate unit, and will probably retire quite a bit of stock in a share buyback.

As large as the DJIA is for "the market," it is far smaller in index weightings for money managers than the S&P 500 Index, and this will not have any direct impact on their weightings in the S&P 500 index.

Jon C. Ogg
February 11, 2008

Posted on: February 11, 2008 – 9:20 am in Index, , , , ,

More DJIA Earnings Pressing (MO, MRK, PG, XOM)

We are over half-way through earnings season now, but we still have four DJIA components set to report earnings this week.  We’ve also provided a link here to see which targets are there in our own Dogs of the Dow targets if applicable.

On Wednesday, we have two more DJIA components posting earnings:

  • Altria (NYSE: MO) will post  earnings for Big Tobacco.  First Call has estimates at $0.97 EPS and $9.19 Billion in revenues.  If it offers 2008 guidance, the estimates are $4.74 EPS on $39.6+ Billion in revenues. What we are most interested is this spin-off of Phillip Morris International.  This has been in the works for longer than we care to think about, but we literally be on the doorstep of the formal spin-off plan.  Also after the spin-off and after the remaining cases in Florida are quantified, we’ll also get to see what may end up being a huge share buyback.  We aren’t banking on a 100% certainty that we’ll these answers after tomorrow’s earnings, but these are perhaps the only real issues we care about.
  • Merck (NYSE: MRK) is expected to show earnings also.  First Call has estimates pegged at $0.74 EPS on almost $6.3 Billion in revenues. As the problems that have risen are not ‘backward looking’ we haven’t seen estimate changes on Q4-2007.  But estimates have started coming down mildly for 2008 with consensus now at $3.37 EPS on $24.76 Billion in revenues.  This report is going to watched much harder than before because of the Vytorin problems that surfaced last week and since shares are down almost 20% in just over two-weeks.

On Thursday, we’ll see the mega-consumer products giant Proctor & Gamble (NYSE: PG) report earnings.  It is hard to imagine that it will be able to avoid making the comments about higher raw materials costs, although the company has managed its earnings rather well so far.  First Call has estimates at $0.97 EPS on roughly $21.25 Billion in revenues.  If the company follows suit with other big multi-nationals and offers 2008 guidance, those estimates are $3.49 EPS & $82.15 Billion in revenues for fiscal June-2008 and $3.92 EPS & $87.25 Billion in revenues for fiscal June-2009.

On Friday we get to see earnings from the most valuable company in the U.S. measured by market cap.  ExxonMobil Corp. (NYSE: XOM) is expected to post $1.95 EPS.  Revenues are not projected as commonplace as earnings but the estimate we saw was over $114 Billion.  The company does not usually offer guidance but it does discuss how higher oil prices affect its costs along with its revenues.  Estimates have risen ahead of earnings in recent weeks, although we’d caution that Exxon does not have any solid history of late in beating earnings despite our pain at the pump and all the price-fixing accusations from the public and from critics.

Jon C. Ogg
January 29, 2008

Posted on: January 29, 2008 – 2:59 pm in Earnings, , , , ,

Stocks & Trends For Bear Market & Recession Investors

2008 is turning out to be a wacky year.  If you are new to trading and investing this is far from the norm.  Statistics vary depending on what day of the week it is but this is the worst January start to a year for most of us.  The DJIA is down some 7.9% in 2007 after a December-end close of 13,264.82; and it is down some 14.5% from the 14,280.00 highs of October 2007. The NASDAQ has fared even worse with a 12.2% drop since December-end close of2,652.28; and it is down 18.7% from the highs of 2,861.51 on October 31, 2007.

The good news is that there are many stocks and many sectors that hold up and it is becoming ever easier by the day for Joe Q. Public to learn to profit from the market slides too.  We just covered a whole spate of ETF’s (OUR FULL ETF INDEX HERE) and you can see the bear market ETF’s to own, and these will also be the ones that many trade during a recession.  We would caution that with many already writing about a bear market or a recession that the worst may have already been seen.  Investors who buy when everyone else feels miserable usually win in time.  247WallSt.com has come up with many lists for traders and investors for 2008.

Investors have been fond of Defensive Stocks in companies such as food, beverages, tobacco, consumer products, and the like.  We have our own index where we cover Value Stocks and trends affecting individual stocks that are geared toward value investors.  We noted "The Four Safest Stocks in the World" this last week, and we even came up with a list of value stocks from defensive stocks for the first part of 2008.

We also gave our own targets and opinions on the components of the Dogs of the Dow for 2008 to show which ones are challenged to do better and which ones may be the sleepers.  Does it make sense that Home Deport (NYSE: HD) is UP FOR 2008?  We outlined it as "Bad times at companies feel like they will last forever just like in the economy, but history dictates that they always recover.  After Q1 or Q2 this could end up being one of the surprise sleepers of 2008."

We also created a list of iconic US companies that may not exist at the end of 2008. Some may not even make it halfway through the year. Not all of these will go out of business, as some may be auctioned off in pieces and others may be bought.

Turnaround stocks (FULL INDEX HERE) are perhaps some of the best opportunities.  Whether you are in good times or bad times there are many companies that just don’t make the grade and have difficulty in generating any growth or any consistent earnings.  Catching the right one will be exponentially rewarding, but because these are troubled you have to be aware that some will completely bite the dust.  We broke these up groups as well and came up with a basic industry list that has yet to turn the ship around.

First and foremost, we came up with a list of stocks that could double in 2008.  This is not a safe list for the faint of heart, because the set-up for a double is very difficult for established companies and there are usually extreme circumstances that have to be in place.  Companies like E*Trade (NASDAQ: ETFC), Palm (NASDAQ: PALM), SIRIUS Satellite radio (NASDAQ: SIRI), Level 3 Communications (NASDAQ: LVLT) and more are on this one.  FULL LIST HERE.  When we did this big list and evaluated out screening of more than 100 companies, there were actually many more stocks that also fit the bill.  Keep in mind that something bad happened along the way for these shares to have been bettered enough where the stock could double. On this other list were companies like Capstone Turbine (NASDAQ: CPST), Qwest Communications (NYSE: Q), Travelzoo (NASDAQ:TZOO) and more. FULL SECOND LIST HERE.

247WallSt.com has also noted some of Jim Cramer’s 2007 calls that still show some pertinence in 2008, and many are still active calls of his.  Cramer also recently outlined many overlooked or oversold tech stocks that he thinks have an uncommon value here.

Most of these come under review regularly in our weekly subscriber letter in "10 Stocks Under $10" which is exactly what it describes: ten low-priced stocks under $10 where we make bullish or bearish analysis as to what is good or what is bad about these.  We call some candidates for exponential growth and some where we think the companies are likely doomed.  247WallSt.com even produced a list of stocks whose volatility and values could cause the shares to FALL 50%.  Some of these already have or are close to it.

Lastly, we have a list of potential management changes.  We have a list of CEO’s that we have designated as CEO’s WHO NEED TO GO.  This is not only over share prices, because many companies do well while their stock doesn’t.  These CEO’s have done heinous jobs usually with a key event or series of events under their watch that has rendered them (and their company) useless.  We even gave a handicap of what sort of rally the stock might see if these managers left.

Jon C. Ogg
January 27, 2008

Posted on: January 27, 2008 – 8:51 am in Defensive Stocks, Economy, Index, Turnarounds, Value Investing, , , , , , , , , , , , ,

ETF’s For A Bear Market & Recession (FXP, DOG, PSQ, SH, QID, SDS, DXD, RSW, RMS, RRZ)

Are we in a Bear Market?  If we aren’t it sure feels like one.  The Dow Jones Industrial Average, or the DJIA, is down some 7.9% to date in 2008 after a December-end close of 13,264.82;and it is down some 14.5% from the 14,280.00 highs of October 2007.The NASDAQ has fared even worse with a 12.2% drop since December-endclose of 2,652.28; and it is down 18.7% from the highs of 2,861.51 on October 31, 2007.

This new stimulus package is going to help keep things afloat a bit and the new mortgage cap lifting along with lower mortgage rates will allow many homeowners to refinance.  But there are still going to be many more credit blow-ups, more house foreclosures, more cars repossessed, more credit card defaults, more delinquent payments, slower retail sales, more bankruptcies, and probably fewer jobs.   

We can’t predict where the market will be at the end of the year and can’t predict how bad the economy will really get.  We may have a softer landing than it was looking just last week, but it is still going to feel like a thud or a hard landing if not worse to many individuals and many businesses.  We’ll be the first to admit that with many in the media covering "Bear Markets" may already mean that the worst has been seen.  Many argue that long-term investors and value investors want to start buying stocks in a recession because if you wait for the good news to come in you might have already missed the boat.

247WallSt.com wanted to compile a list of "Inverse ETF"s" that are actually designed to go up in a down market.  This is in a sense the same thing as short selling without having to understand the metrics and rules of short selling.  In essence, these are the easiest transactions to make for novice investors and sophisticated fund managers alike.

ProShares has created ETF’s that trade inversely with the markets.  These are aimed to allow investors and traders to hedge against market downturns or that want to profit from a market decline.  These ETFs are very liquid and actively traded and are designed to go up when indexes go down.  As a reminder, the SHORT funds use no leverage, but the UltraShort funds employ leverage.  Here is that list by Fund (Ticker):

  • Short QQQ (AMEX: PSQ)    
  • Short Dow30 (AMEX: DOG)    
  • Short S&P500 (AMEX: SH)    
  • Short MidCap400 (AMEX: MYY)    
  • Short SmallCap600 (AMEX: SBB)    
  • Short Russell2000 (AMEX: RWM)    
  • UltraShort QQQ (AMEX: QID)    
  • UltraShort Dow30 (AMEX: DXD)   
  • UltraShort S&P500 (AMEX: SDS)    
  • UltraShort MidCap400 (AMEX: MZZ)   
  • UltraShort SmallCap600 (AMEX: SDD)   
  • UltraShort Russell2000 (AMEX: TWM)
  • UltraShort FTSE/Xinhua China 25 (AMEX: FXP)… short selling the Chinese Stocks.

Rydex Funds was perhaps the first of the mutual fund operators that actually had the inverse of the S&P called the Rydex Ursa Fund, now called the Rydex Inverse S&P 500 Strategy Inv (RYURX).  As Rydex saw the importance and rise of ETF’s, it combined its open-ended fund management operations into one that now has ETF’s for traders as well.  Here are its inverse funds:

  • Rydex Inverse 2x S&P 500 (AMEX: RSW)
  • Rydex Inverse 2x S&P MidCap 400 (AMEX: RMS)
  • Rydex Inverse 2x Russell 2000 (AMEX: RRZ)

These are not all of the ETF’s out there.  But these are two of the fund families we have seen that have liquidity and recognition in the sector.  Stay tuned to our ETF news as we are expanding this into a new branch.  We’ll also be covering certain defensive strategy ETF’s that use covered call option strategies, value investing strategies, and some that focus on defensive strategies.

Jon C. Ogg
January 27, 2008

Posted on: January 27, 2008 – 8:01 am in ETF, , , , , , , , , , , , , , , ,