Cisco Systems: Stronger, but Way Short of Its All-Time High
Cisco Systems Inc. (NASDAQ: CSCO) managed to gain 13% in 2018, compared with a preview gain of only 4.65% that had been forecast a year earlier. That is down from a total return of about 26.7% in 2017 and is valued at 17 times trailing earnings and less than 14 times forward earnings. Even considering that Cisco has retired billions upon billions worth of stock via buybacks, the market cap is less than $200 billion.
The networking giant has moved away from just equipment sales and more towards services, security and recurring revenues. It also has a lot of exposure to markets in China and elsewhere that could suffer if the global economy continues to slow. Cisco closed out 2018 at $43.33 a share, it has a 52-week range of $37.35 to $49.47 and the consensus target price of $52.76 would imply an expected gain of 21.7%, before even taking its 3.1% dividend yield into consideration. All that considered, Cisco was just 1.26% of the Dow’s weighting, the lowest weighting of all 30 components.
Coca-Cola: Moving Beyond Just Coke, and Finally Moving Above the Old Range
Coca-Cola Co. (NYSE: KO) had managed to get its share price up to a level that was considered a technical breakout before the market volatility came into play heading into the end of 2018. Its share price of $47.35 generated a gain of just over 3% in 2018, and the $51.66 consensus target price is above its 52-week and all-time high of $50.84. If analysts are correct, Coca-Cola could return 9.1% in appreciation and the total return would be 12.4%, after taking its 3.3% dividend yield into account. Analysts had been looking for a 10.1% return in 2018 up to the $49.06 consensus analyst target at the start of 2018, but again it’s the sell-off that came into play.
Coca-Cola is rather defensive by nature so it may hold up well if the markets are choppy in 2019, and the company keeps making investments away from its old carbonated sugar-water image. One thing to consider is that Coca-Cola shares are valued at 21 times forward earnings. The beverage giant also can still point out that Warren Buffett and Berkshire Hathaway are major long-term shareholders and that they have not sold any of their shares.
DowDuPont: More Breaking Up to Do in 2019
DowDuPont Inc. (NYSE: DWDP) was a newly amalgamated post-merger combination of Dow and DuPont, so its performance over the course of 2017 is being excluded. Analysts were expecting gains of over 16% in 2018, but the slowing economy for industrials and companies with major exposure overseas created a loss of nearly 25%. At $53.48 a share at the end of 2018, it has a 52-week range of $48.89 to $77.08 and comes with a consensus target price of $74.96, which would imply a gain of about 40%, before even considering its 2.8% dividend yield.
One issue which makes Dow DuPont so difficult to predict is that the chemicals giant is still expected to break itself up into three companies, and those spin-out companies might even make moves of their own. For whatever this is worth, analysts just do not know how to properly forecast a company’s future financial performance when units are being pulled out, carved off or being added onto. That leaves DowDuPont on its own, and investors here are betting on faith and promises more than they are on a future structure they can fully understand.
Exxon: After Tanking Oil, Can Nat-Gas Finally Pay Off?
Exxon Mobil Corp. (NYSE: XOM) managed to drop 18% in 2018, and that was after a drop of 7.3% in 2017. Exxon needs higher oil prices, and just about anything tied to oil was hammered down in 2018. With a year-end close of $68.19 a share and a 52-week trading range of $64.65 to $89.30, Exxon’s consensus target price of $86.51 would imply a return of almost 27% in 2019, even before considering its 4.8% dividend yield. Exxon may have a win as natural gas exports can help the company more than many of the other oil giants. That would vindicate the criticism in prior years after making a huge gas acquisition. Still, Big Oil faces a challenge in bringing in new investors that is an industrywide problem.
Goldman Sachs: Can the “Golden Slacks” Image Return After an Awful 2018?
Goldman Sachs Group Inc. (NYSE: GS) has found itself in the midst of international scandal and domestic investigations again, and new CEO David Solomon just doesn’t really seem to want to communicate to the public and investors as much as Lloyd Blankfein did. After a small gain of 6.4% in 2017, Goldman Sachs lost about 34% of its value in 2018. It is supposed to be the top investment bank for the wealthy and institutions, but the firm wants its Marcus online bank and finance play to move to the masses and younger clients.
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