After closing at $167.05 in 2018, Goldman Sachs shares have a 52-week range of $151.70 to $275.31, and the consensus analyst estimate was still somehow all the way up at $253.30 as 2018 ended. That would imply upside of 51.6% before considering its 1.9% dividend yield. The consensus price target had been up at almost $275 at the start of November, but this seems like yet another situation in which analysts did not lower expectations enough and will need to greatly dial down their price targets and expectations as 2019 gets underway. Goldman Sachs historically traded at a premium to its book value, but it was down at about 0.8 times book value at the end of 2018.
Home Depot: The Tailwinds of Housing Turned Into Headwinds
Home Depot Inc. (NYSE: HD) managed to see its share price drop over 9% in 2018, after generating a stellar return of over 41% in 2017. Its expectations were only for a 3% gain or so in 2018, but the slowing in housing, some pressure in retail and even some fears of a slower confidence game ahead all weighed on Home Depot in 2018. If housing continues to remain slow in 2019, it’s hard to get very excited here. Still, Home Depot has strong internals, and it is raising its dividend and buying back stock. The home construction products giant closed out 2018 at $171.82, in 52-week range of $158.09 to $215.43. Its consensus target price of $204.79 would imply upside of 19.2%, before considering its 2.4% dividend yield.
Intel: Still Changing Its Stripes for the Better
Intel Corp. (NASDAQ: INTC) may be changing to less of a PC component play than a decade or two ago, but it has faced several challenges in 2018. One crucial issue was losing its CEO over an internal policy issue, which left Intel vulnerable to a leadership and development vacuum risk, when you consider other managers might have wanted to (or still may) jump ship. That said, Intel matters more in the broader market than in the Dow because it is the third lowest weight at just over 1.3%. After an upside return of 27.3% (versus an expected 13% gain) in 2017, Intel’s mere 1.7% gain for 2018 was less than its expected return of just 4.33%. With shares at $46.93, in a 52-week range of $42.04 to $57.60, the $54.34 consensus target price implied a gain of nearly 16% for 2019, before considering the 2.6% dividend yield.
IBM: Big Blue, Continued Disappointment
International Business Machines Corp. (NYSE: IBM) is a company that just cannot get a break, even in acquiring Red Hat. As we have noted in prior years, IBM has continued to disappoint, as the decline in the core IT services business cannot be made up with the added boosts from stock buybacks and increased dividends. Its growth areas of cloud, artificial intelligence, machine learning and other high-growth segments can’t make up for the difference yet.
IBM lost almost 26% of its value in 2018, and that was after a return of −7.6% in 2017. At $113.67 a share by 2018’s end, it had a 52-week range of $105.94 to $171.13. Analysts still somehow have a consensus price target of $149.58 on Big Blue, which is an implied gain of 31.6%, before considering that 5.5% dividend yield. More analysts seem likely to trim their targets further if IBM does not rapidly recover in 2019.
Johnson & Johnson: From Riding Higher Dividends and Tax Reform to Asbestos
Johnson & Johnson (NYSE: JNJ) lost more than 7% in 2018, after having a total return of over 21% in 2017. Its consensus target price of $148.17 is higher than the consensus target price of $146.82 a year earlier. At $129.05 a share, Johnson & Johnson is down from a high of $148.17 from before the sell-off and before its talcum powder woes created an unknown and incalculable financial risk tail. With shares at $129.05 at the end of 2018, analysts are looking for a total return of 17.6%, including the 2.8% dividend yield.
JPMorgan: Deregulation Booster Turned South
JPMorgan Chase & Co. (NYSE: JPM) blew out expectations in 2017, with shares returning almost 24%, when analysts were originally expecting a −1.1% return. But Jamie Dimon and his team’s share price dropped by 8.7% in 2018. The stock traded at $97.62 at the end of 2018, and the consensus price target of $120.07 is way higher than the consensus target of $104.23 from a year earlier. The 3.3% juiced-up dividend yield would imply a total return of 26.3%, if the pool of analysts is proven to be correct.
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