Investing
The Worst Performing DJIA Stocks of 2014
September 25, 2014 6:43 am
Last Updated: September 25, 2014 7:11 am
Despite a recent pullback, the bull market is more than five years old and the Dow Jones Industrial Average (DJIA) is up in 2014. The pullback has been less than 2% from all-time highs, but not all Dow stocks are participating in this year’s bull market. In fact, eight of the 30 DJIA stocks were recently trading with negative total returns in 2014 — accounting for the share price drop and still including the dividend payouts.Source: Jon Ogg
After taking a look over the Dow’s laggards in 2014, it turns out that many of the companies are those you would assume are having problems from labor and/or poor sales trends. 24/7 Wall St. wanted to review the worst DJIA stocks so far this year.
The emphasis here is, of course, what is acting as a drag against each negative Dow performer. What we did after that was to see if there is an opportunity in that weakness. It turns out that there are some good things that may minimize some of the concerns. We reviewed the share price and performance against a trading range, and we looked at things like the dividend yield and implied upside to the analyst price targets. Share prices are as of Tuesday’s closing bell.
These are the worst-performing DJIA stocks so far in 2014.
McDonald’s
> Loss in 2014: 1.2%
> Dividend Yield: 3.40%
> Share Price: $93.51
> Mean Price Target: $98.93
> 52-Wk. Range: $90.53 – $103.78
> Market Cap: $92 billion
McDonald’s Corp. (NYSE: MCD) is a company that truly feels lost. The current management team has labor issues to deal with, and the company’s move to a “healthier” offering of food items just hasn’t seemed to attract the winners once hoped for. A spate of negative same-store sales trends has not helped, and it is almost as if there is a risk that 52-week lows could come up again. The stock is not even cheap at 16 times next year’s consensus earnings estimates and 17 times trailing earnings. Still, there are some positives. The 3.4% dividend yield outpaces peers handily, and analysts see more than $5 in upside.
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American Express
> Loss in 2014: 1.9%
> Dividend Yield: 1.20%
> Share Price: $88.31
> Mean Price Target: $98.52
> 52-Wk. Range: $72.08 – $96.24
> Market Cap: $93 billion
American Express Co. (NYSE: AXP) will not be deemed a loser in the trends toward Apple Pay, something that some market observers thought may be a problem. Despite having pulled back 8% from its highs, AmEx remains at a market premium valuation compared to many traditional financial stocks. Another issue is that AmEx has a mere 1.2% dividend yield, which feels low given its premium client base compared to other credit card issuers. After all, it caters to wealthier clients but offers far from a wealthy dividend. The good news here is that analysts still see about $10 worth of upside in the stock. Another boost is that its largest long-time holder is Warren Buffett’s Berkshire Hathaway.
Walmart
> Loss in 2014: 2.1%
> Dividend Yield: 2.60%
> Share Price: $75.60
> Mean Price Target: $80.17
> 52-Wk. Range: $71.51 – $81.37
> Market Cap: $244 billion
Wal-Mart Stores Inc. (NYSE: WMT) is another Hall of Shame Dow stock. The company’s ongoing labor woes are a constant struggle, but its flat and disappointing sales trends only highlight that the days of growth may be largely over. A move to compete with the dollar store theme does not exactly sound like the retailer is in a great place, and it may not be enough to move the needle. There are still some good things here. Analysts see upside, and the stock’s forward price-to-earnings (P/E) ratio is only about 14. Another boost is that its 2.6% dividend yield is above some of its peers. Lastly, you know Walmart has been an aggressive buyer of its own shares in recent years, and Walmart recently named Greg Foran as its new President and CEO of Walmart U.S.
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