Bull Market Risks & Opportunities From 2019 Into 2020: Apple, Microsoft, Amazon, Boeing, IBM, Exxon and More

Microsoft Corp. (NASDAQ: MSFT) was the next biggest gainer in the Dow with a 55% gain in 2019, and many expect Microsoft to prevail over Inc. (NASDAQ: AMZN) in the $10 billion JEDI cloud contract. Microsoft continues to seep upside from Azure and its online Office and other offerings. And while Amazon is not a Dow stock, Jeff Bezos stock was very flat for most of 2019 until the final week after it released record-breaking online sales from it and third party sellers. Its 23% gain in 2019 would have been just 18% had the Christmas and Holiday Season sales news been a non-event, and it is currently well off its highs and still has a $917 billion or so market cap.

Analysts currently see more upside in Amazon than Microsoft in 2019, but the solid performance of Microsoft and underperformance of Amazon may have skewed expectations that might see analysts make changes in the first weeks of 2020.

Apple and Microsoft alone have a combined market cap of close to $2.5 trillion at this point, with $1.3 trillion being Apple and almost $1.2 trillion for Microsoft. Apple and Microsoft alone accounted for 15% of the gains of the entire S&P 500 and accounted for roughly 1,300 points of the Dow’s 5,200 point gain.

Can Boeing Get Its Wings Back (and Rejoin the Bull Market)

Boeing Co. (NYSE: BA) was a huge disappointment after the two deadly 737 Max crashes grounded the entire fleet of that plane to where the problems are still not solved. Boeing even finally capitulated and sent its CEO Dennis Muilenburg walking (resigned, or whatever). With global geopolitics still hot (Iraq, Syria, North Korea just to name a few) and with a weapons and defense race as tensions with China and Russia remain elevated, there do still appear to be at least some undervalued defense stocks for 2020. After all of that, Boeing’s total return was still 1% in 2019. That’s impressive considering that it is down 27% from a peak of about $446.00.

Until the 737 Max grounding has a path of resolution to re-certification and rekindled interest, we won’t even bother with the consensus price target of $366.40 and expected upside in this review. At Boeing’s peak earlier in 2019 and before the selling pressure, its shares had risen 270% from early 2016.

Will the Dow’s Top 2019 Losers See an Upside Recovery in 2020?

Walgreens Booots Alliance Inc. (NASDAQ: WBA) closed out the year with a 13.7% loss, but a gain of 15% to 20% from its lows kept it from being far worse. After closing out at nearly $59.00 at year-end, the consensus target price was actually still down at $57.11 so the analyst community may ratchet targets up or the shares may just be trading more than what Wall Street really sees as a fair value.

Pfizer Inc. (NYSE: PFE) closed out 2019 with a return of −10.2%, but at $39.18 its consensus analyst target price of $41.91 from Refinitiv would imply a total return expectation of about 10.9% for 2020. Pfizer has key data and reviews for colorectal cancer, Alzheimer’s and other issues. Pfizer’s implied upside in 2020 might have looked better if the shares had not gained more than 10.5% in the fourth quarter.

3M Co. (NYSE: MMM) may have seen fourth-quarter gains of over 11%, but 3M shares closed out 2019 with a very disappointing −7.4% total return. Will trade tensions easing help 3M’s China sales, or will management be able to get to the bottom of its ongoing margin erosion issues? And can 3M get its investors away from the unusual environmental situation the company is now in.

Because the performance has suffered on top of already high dividends, all three of the Dow’s big losers (Walgreens, Pfizer, 3M) are confirmed in the Dogs of the Dow we previewed in December.

Can Big Blue Get Back on Track (and Maybe a New CEO?)

International Business Machines Corp. (NYSE: IBM) may have managed to post a 17.9% total return in 2019 after adding in dividends, but at $134.04 it is hopelessly caught in a very narrow and unimpressive trading range of $132 to $136 for most of the last three months. IBM spent up for Red Hat in a move that has not yet unlocked that growth driver for investors. One issue to consider is that CEO Ginni Rometty just has not delivered gains for IBM investors. She assumed the CEO role in January of 2012, and during this time of great economic expansion and technology’s exponential rise from the new tech titans, IBM shares have come down from closer to $200.00.

IBM just simply cannot replace all of its core IT-services revenue losses from the gains in the strategic imperatives of the business. That includes Red Hat and from the cloud, machine learning and artificial intelligence (Watson and beyond), as well as security, analytics and so on.

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