Home Depot: Riding Housing Higher Yet Again
Home Depot Inc. (NYSE: HD) was another great outperformer in 2017, generating a return of over 41%, compared with the 14% gain expected. Its year-end share price of $189.53 comes with a 1.88% yield, and the consensus target price of $190.87 would imply a total return of just 2.59% in 2018.
Intel: Changing Its Stripes for the Better
Intel Corp. (NASDAQ: INTC) finally surpassed analyst expectations in 2017, with an upside return of 27.3% versus an expected 13% gain. The processor and memory giant has been steadily diversifying away from chips just for PCs and servers. With shares at $46.16 as of the end of 2017, the $47.07 consensus analyst target and the 2.36% dividend yield still only imply an upcoming return of 4.33% for 2018, if the analysts are correct.
IBM: Big Blue, Continued Disappointment
International Business Machines Corp. (NYSE: IBM) has continued to disappoint as the decline in the core IT services business cannot be caught up and overcome by higher stock buybacks, increased dividends and the growth in its cloud, AI and high-growth segments. IBM was expected to show a return of −2.2% in 2017, but that return was −7.6% instead. At $153.42 a share at the end of 2017, the stock has a consensus target price of $163.74 and the dividend yield of 3.91% that would generate an expected total return of 10.64% in 2018.
Johnson & Johnson: Riding Dividends and Tax Reform
Johnson & Johnson (NYSE: JNJ) returned over 21% in 2017, versus an expected return of 11.4%. With shares at $139.72 apiece, the consensus target price of $146.82 and the 2.40% dividend yield would create an expected return of 7.48% in 2018, if the analysts are correct.
JPMorgan: Tax Reform and Lower Regulation Booster
JPMorgan Chase & Co. (NYSE: JPM) blew out expectations in 2017 with shares returning almost 24%, when analysts were originally expecting a −1.1% return. The stock traded at $106.94 a share at the end of 2017, and analysts have a target price of $104.23. The 2.09% yield would imply a total return of −0.44% in 2018, if the pool of analysts is correct.
McDonald’s: Can the Arches Leap Again?
McDonald’s Corp. (NYSE: MCD) had another above-expectations year in 2017, generating a return of over 41%, versus expectations for a mere 8.2% return. McDonald’s closed out 2017 at $172.12, and the consensus price target of $179.79 and dividend yield of 2.35% would generate an implied total return of 6.81%, if analysts are right this year.
Merck: Time to Rekindle
Merck & Co Inc. (NYSE: MRK) disappointed in 2017 as the return of −4.4% was more than 20 percentage points from the expected 17.5% return called for a year ago. Merck’s shares fell to $56.27 by the end of 2017, and the $65.23 consensus price target and the 3.41% yield would make for a return of 19.3% in 2018, if analysts are correct.
Microsoft: Floating Happily in the Cloud
Microsoft Corp. (NASDAQ: MSFT) was expected to generate a return of just 6.9% in 2017, but its 37.7% return blew out expectations and took shares to highs not seen in 17 years. Microsoft traded down in the past month or so of 2017, off of highs, to close out 2017 at $85.54. The software and cloud giant’s consensus target price of $92.75 and the dividend yield of 1.96% would imply an expected return of about 10.4% in 2018, if the analysts are correct.
Nike: Slow Reboot Higher
Nike Inc. (NYSE: NKE) was a disappointment for some time, but it generated a total return of 23.1% that somehow came incredibly close to the 23.4% expected return for 2017. After closing out 2017 at $62.55, its consensus target price of $64.65 and the 1.28% dividend yield would make an expected 4.64% return for shareholders in 2018. Does it matter if Nike shares reach almost $70 before splitting in 2015?