The Five Worst Performing DJIA Stocks of 2013
Now that Congress and the White House have managed to cobble together a compromise on the government shutdown and the debt ceiling, investors can get back to planning their finances and making market decisions again. That may only have a 90-day time limit, but at least a temporary deal is here. Not everything is performing as well as you might hope in the stock market.
24/7 Wall St. recently showed 10 major trends that the D.C. settlement will not change at all. One of those trends is that the bull market will continue. Stocks hardly sold off during the height of the D.C. panic, and the worst sell-off level in the Dow Jones Industrial Average (DJIA) from peak to trough was only 6%. Now we are within striking distance of all-time highs all over again, and the DJIA was up about 14% year to date on last look.
This has been a huge year for stocks, and that is likely to continue. However, not all stocks are created equal. Several DJIA stocks simply are not living up to the performance expectations of the broader stock market.
Here are the five worst performing of the 30 DJIA stocks so far in 2013.
International Business Machines Corp. (NYSE: IBM) has had two negatives come up for it. First is that it is no longer the heaviest-weighted DJIA stock, now that Visa Inc. (NYSE: V) has a share price $20 higher. The second black eye is that IBM is now the worst performing DJIA stock of all of 2013 after its shoddy earnings. Ginny Rometty’s maintaining of a $20 per share earnings in 2015 is just coming with too high a price for IBM’s workers and its future. IBM is now down 7% year to date, at $175.45, and that is a new 52-week low. The official analyst target was well above $210 before earnings, but downgrades and price target reductions will lower that. IBM still yields a paltry 2% and is in need of a serious dividend boost.
Caterpillar Inc. (NYSE: CAT) had been the worst-performing DJIA stock in 2013, with a drop of 2.4% year to date. It was no shock that the results are suffering with China slower, Brazil slower and the rest of the emerging markets and major mining all suffering subpar growth. Trading at $85.65, it has a 52-week trading range of $79.49 to $99.70. The consensus analyst price target has come all the way down to $92.18. Caterpillar’s dividend is at 2.8% now.
Exxon Mobil Corp. (NYSE: XOM) is almost surprising to see as the third worst stock, since oil has been over $100 a barrel for some time. Still, shares are up about 2.8% for the year, based on an $87.23 price on Thursday. Big Oil’s price target is still almost $95, and its dividend yield is an impressive 2.9%.
AT&T Inc. (NYSE: T) is surprising to see on the list. The telecom giant has maintained much of its share base, and its dividend payout ratio has been tolerable. As of Wednesday’s close, the stock was up less than 7% year to date. We would point out that it is the king of the DJIA dividends with a 5.3% yield. Trading at $34.30, it has a consensus price target of only $36.87, and that would not even take it to a 52-week high. Perhaps the low contract barriers of the second-tier cellular providers are finally posing a challenge.
Coca-Cola Co. (NYSE: KO) was up just more than 7% year to date before a gain on Thursday. Shares actually have bounced from their lows, but what was shocking was just how poorly this did after peaking at $43 in May and sliding to $37 recently. The dividend yield is 3%, but Coke’s dependence on soft drinks and sugar-laden drinks may be catching up to it as the country tries to lower its sugar consumption. Trading at $38.30, it has a consensus price target of $44.20 from analysts. Note that the 52-week range is $35.58 to $43.43.