Investing

2018 Dow Laggards Could Offer Material Upside Into 2019

The company also keeps raising its dividends, even in recessions. Trading at $78.06, Procter & Gamble has a 52-week range of $70.73 to $94.67 and a consensus analyst target of about $81.50. For whatever it’s worth, activist Nelson Peltz is in this company now too, and his price is closer to $90, with ambitions of the stock being worth over $100 based on past peer comparisons.

Caterpillar

Caterpillar Inc. (NYSE: CAT) is a trade war victim that now has given back much of 2017 gains. Its shares are down about 14% after the first half of 2018 with a price of $135.67, but its shares are almost 22% lower than its recent highs of $173.24. Analysts still have their consensus price target up at $172.00 or so, as they have yet to ratchet expectations down.

Unfortunately for Caterpillar’s investors, they are going to find out how slower global growth, tariffs, trade retaliation, a strong dollar and international competition hit the stock all at once. It was closer to $95 a share at the start of 2017, and investors need to consider that Caterpillar is valued at less than 13 times expected 2018 earnings.

Goldman Sachs

Goldman Sachs Group Inc. (NYSE: GS) has suffered a lack of investor interest in 2018 as the rise in interest rates has met a flattening yield curve at the same time that global growth is slowing, trading revenues could be tempered and even as the firm goes more mainstream with its Marcus retail banking products. The most recent Federal Reserve “CCAR” stress test was deemed to be harder than expected on Goldman Sachs for 2018, and that means that its 1.5% dividend yield is likely to remain rather muted compared to banking peers.

Shares of the firm also known as “Golden Slacks” were down almost 13.5% in the first half of 2018 and down 20% from its recent highs, but its $220.57 share price compares with a 52-week range of $214.64 to $275.31. The consensus target price is closer to $274. That higher price may require a lot of the pro-growth agenda issues to come back on the table, and that remains in limbo.

Walmart

Walmart Inc. (NYSE: WMT) may be the most nimble and strongest physical retailer that can fight a world that seems to only care about the impact of Amazon, but Walmart shares were down about 13% during the first half of 2018. The retailer just seems to keep running into same-store sales issues, and it is in a period when it is willing to potentially overspend to make acquisitions that will help drive the direction in the next decade.

At $85.65 a share, Walmart is actually down an even worse 22% from its recent all-time high of $109.98. The consensus target price is up at $95.12, and Walmart also pays investors a dividend yield of 2.5%, while it keeps raising its dividend and buying back stock. Walmart is valued at almost 18 times expected current year earnings estimates.

Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is supposed to be a defensive stock in medical, pharmaceuticals and consumer products that grows its earnings and dividends year after year. Shareholders have paid little attention to that as the megacap stock was down 13% in the first half of 2018 as well as down over 17% from the all-time high. At $121.34 a share, Johnson & Johnson has a 52-week range of $118.62 to $148.32 and a dividend yield of almost 3% now. The consensus price target currently is close to $143.57.