Friday, November 3, 2017

7 Stocks That Will Push the Dow Jones to 25,000

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The Dow Jones Industrial Average is on a roll. The storied index recently breached the psychologically significant 23,000 mark for the first time, and in doing so the Dow logged yet another all-time high.
Certainly, if you’ve owned the 30 Dow Jones stocks in 2017 you’ve done remarkably well. In fact, the Dow is up some 18.5% year to date (through midday Thursday), a move that relatively few pundits (myself included) would have thought likely at the beginning of the year.
Now the question for investors is: What, if anything, will push the Dow materially higher?
The answer, as I see it, lies in Washington, D.C. I think the key to Dow 24,000, and ultimately Dow 25,000, rests in the hands of Congress, and specifically the issue of tax reform. If we get some real tax reform that includes a sizeable cut to the corporate tax rate (to 20% or at most 25% from the current 35%) that will go a long way toward justifying the high valuations on stocks (the S&P 500 currently trades at about 18X 2018 earnings estimates).
The tax reform legislation released Thursday, however, was met with a lukewarm reception. Yet, while the macro backdrop of tax cuts will be the external catalyst for the Dow’s fate, that doesn’t mean all Dow Jones stocks will benefit equally.
To get the Dow to 25,000, we are going to need to see big gains in many of the Dow’s components. Yet which Dow stocks will have to shine in order to send the Industrial Average up through the 25,000 mark? The smart money wants to know, so allow me to pontificate.
Here are seven stocks that will send the Dow to 25,000.

Dow Jones Stocks: Apple Inc.
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The world’s leading personal technology company is a relative newcomer to the Dow, as Apple Inc. (NASDAQ:AAPL) was only granted admission to the Industrial Average in March 2015. Yet in the two-and-a-half years since, Apple shares have jumped nearly 30%, a move that’s helped the Dow trek to record highs.
In early August, Apple’s stronger-than-expected, fiscal Q3 revenue and earnings easily bested estimates on the back of solid iPhone sales. That caused shares to rise sharply, and that rise helped the Dow breach the 22,000 on its way to one of many record highs in 2017.
But September was tough for Cupertino giant, as shares tumbled more than 6% that month on a disappointing initial reaction, and potential production delays, in its new iPhone 8 and X models.
For the Dow to move to 25,000, Apple is going to have to perform the way it did in August, when shares surged more than 10%. What can make that happen? It’s called a new iPhone for Christmas.

Dow Jones Stocks: Coca-Cola

Carbonated sugar with a distinctive flavor is popular around the globe, and that’s made Coca-Cola Co (NYSE:KO) and its flagship Coke brand one of the most successful consumer brands in corporate history. In recent years, the Coke brand has lost a bit of its fizz, but the beverage giant has adjusted nicely by promoting successful brands such as Sprite, Honest Tea and smartwater to its mix.
It was success in these brands that helped KO report better-than-expected third-quarter. Cost-cutting programs and the refranchising of its low-margin bottling operations also helped KO beat estimates. So far in 2017, shares are up nearly 12%.
That’s helped lift the Dow, but for the Industrial Average to surge to 25,000, KO will have to get out of its recent funk. Shares have basically traded flat over the past three months (up just 0.50%).
If investors begin opening the bottle again on KO shares, that will give the Dow a sugar high that could send it past 25,000.
  • Dow Jones Stocks to Buy: McDonald’s


    Fast-food giant McDonald’s Corporation (NYSE:MCD) may be the oldest kid on the cheap restaurant block, but that just means the company has had time to figure out the ever-changing taste trends of its patrons. Key amongst those trends is the desire for “fresh” and health foods, and in recent quarters McDonald’s has promoted items that cater to that demand.
    On Tuesday, the company reported Q3 earnings per share of $1.76. That was basically in line with expectations. Revenue was $5.8 billion, which was a slight beat vs. the $5.7 billion analysts had anticipated.
    The really sound metric was the company’s same-store sales in the U.S. That number climbed 4.1%, far outpacing the 3.6% growth industry watchers had anticipated.
    That same-store sales number is even more impressive considering it came during a period that included Hurricanes Harvey and Irma, which shut down many of its restaurants for days and even weeks.
    So far in October, MCD shares are up nearly 5%. For the Dow to go to 25,000, we need MCD shares to serve up more solid gains.

Dow Jones Stocks: Walmart

Retail behemoth giant Wal-Mart Stores Inc (NYSE:WMT) is one of the few companies to, at least recently, figure out a balance between selling items in physical locations and selling online.
That mix of sales funnels allowed Wal-Mart to announce in early October during its annual meeting that it’s still expecting earnings per share to range from $4.30 to $4.40 for fiscal 2018, in line with current Street estimates.
The company also rather boldly announced that it expects its fiscal 2019 earnings per share to be up 5% from the year prior. Perhaps most impressively, the company’s renewed focus on online sales has allowed it to announce that it expects e-commerce in the U.S. to rise by some 40% in fiscal 2019. Part of that renewed focus includes an additional 1,000 online grocery locations in the U.S.
Wal-Mart’s share price is up nearly 11% in October, and that recent move helped lift the Dow past 23,000. To get the Dow past 25,000, we need more of the same from WMT stock.

Dow 25,000 Stock to Buy #5: Procter & Gamble

One of the Dow stocks that’s been lagging in 2017 (although it’s still up 4.3% year to date) is consumer products giant Procter & Gamble Co (NYSE:PG). The company recently reported “ok” fiscal Q1 earnings, which came in at an adjusted $1.09 vs. estimates for $1.08.
Revenue came in at $16.653 billion vs. $16.698 billion expected by analysts. That top-line figure did, however, represent 1% year-over-year growth. Ans when you take out the effects of changes in currency, we get organic growth that also came in at 1%.
Perhaps more important in the life of PG shares is the recent proxy battle with activist investor Nelson Peltz. That brawl has pressured PG shares. Of course, sagging segments such as the Gillette men’s grooming operations have damaged profits and the share price more than Peltz ever could.
If the Dow’s going to jump past 25,000 anytime soon, we need to see PG shares get back to favor with the smart money.

Dow Jones Stocks: IBM

The share price performance of “Big Blue” hasn’t been very big over the past five years, but it has been rather “blue.” In fact, International Business Machines Corp (NYSE:IBM) stock is down some 20% over that time, and that’s enough to give any investor the blues—especially when you consider the Dow is up almost 79% during that period.
Yet fortunes are beginning to turn, at least somewhat, for IBM. The company just released better-than-expected earnings for the third quarter, where it said adjusted EPS came in at $3.30, two cents per share better than what Wall Street was expecting. Revenue also beat expectations, coming in at $19.15 billion vs. the $18.6 billion expectation.
Shares jumped on the news, lifting IBM up more than 6% so far in October. That is the kind of strong performance from a hitherto laggard that we need to see if the Dow is going to vault to 25,000.

Dow Jones Stocks: 3M Co

One of the strongest performers in the Dow this year has been industrial products maker 3M Co (NYSE:MMM). The stock has powered some 30.5% higher year to date, and that gain has come on the back of solid earnings. In fact, the company, best known for its famous consumer brands Scotch, Post-It, and Scotch-Brite, recently reported strong Q3 results that easily beat expectations.
3M said its Q3 bottom line was $2.33 per share, well above estimates calling for EPS of just $2.21. That solid earnings metric came as a result of strong revenue, which came in at $8.17 billion, well above consensus estimates of $7.93 billion.
Impressively, 3M saw sales rise in each of its reporting segments. Leading the way was the electronics and energy segment, which climbed 13.1% year over year. 3M also saw sales growth in its industrial, its biggest overall segment, of 6.2% year over year to $2.8 billion.
If that weren’t enough bullishness for one report, the company also raised its full-year guidance for sales growth from 3% to 5%, to 4% to 5%, and its EPS forecast from the prior range of $8.80 to $9.05 to $9.00 to $9.10.
With a gain of nearly 11% so far in October, MMM shares already are spearheading the march toward Dow 25,000.
Jim Woods is the Editor-in-Chief of  Successful Investing and the Intelligence Report. As of this writing, he was long MCD, WMT, PG, IBM and MMM in his Intelligence Report advisory service.

Saturday, April 1, 2017

Buy Facebook Inc (FB) Stock and Don’t Look Back

The world's biggest social network looks to boost ad revenue even more



Facebook Inc (NASDAQ:FB) is up nearly 25% in 2017. And the crazy thing is, that isn’t surprising. For a company with 1.86 billion monthly users that continues to log a compounded annual growth rate (CAGR) around 17% even at these levels, it’s hard to know what can slow it down.

For a long time, its one Achilles’ Heel was its ad revenue. When you see that at least 90% of FB’s revenue is derived from advertising it’s a pretty scary concept. The company with a $410 billion market cap and a price-earnings ratio of 40 only has one source of income.
But don’t worry. It’s not the first company to rely on one revenue source for its success. Clorox Co (NYSE:CLX) only sold bleach for most of the 20th Century and remains a great company today.
While these are two wildly different markets, the one commonality is the fact that both companies’ leadership knows how to adapt and grow as economic cycles come and go. A company like CLX that has been doing it for over a century and FB hasn’t logged that kind of history, but the fact is, both were the only game in town for quite a while.
Yes, there were challengers, but branding was key and the name became synonymous with quality and performance. These days, FB continues to expand that advertising base with new, innovative ideas. One of the most recent ones is testing ads in the “Related Articles” section of “Instant Articles.” It has also bumped up advertising to every 250 words from every 350 words.
These moves may seem trivial, and they should for a company with such a massive base of users. But the implications are significant for that very reason — it means billions of more ads seen every month.
It also shows that the people at 1 Hacker Way understand the advantages to its fast-growing ad revenue as well as its risks. If you go too heavy-handed with ads, users will stop using the service as regularly. This subtle move will give FB a good measure of how it can best expand ad revenue without harming its reputation or using more aggressive personalized advertising.

Bottom Line on FB Stock

The big daddy of online ad revenue remains Alphabet Inc’s (NASDAQ: GOOG) Google division. And even there, Facebook is looking to gain some ground with its recent addition of Facebook Video that is trying to get at some of GOOG’s YouTube lunch.
But the thing I like most about FB right now isn’t the fact that it’s looking ahead and staying competitive in a very dynamic and dog-eat-dog space, it’s that Mark Zuckerberg & Co. is executing, quarter after quarter.
User growth is up across its product lines. And most important, average revenue per user continues to rise. That means it’s finding new ways to get users to say “yes” to advertisers. This number gives FB pricing power with advertisers, which will help grow revenue as well as margins.




Dividend Smackdown: IBM Stock vs. MSFT Stock

We look at dividend yield, income growth and prospects for big tech juggernauts IBM and MSFT



Ring the bell because it’s that time again. We’re putting two iconic dividend payers in the ring for an old-school dividend smackdown. The fighters: Two old-school tech giants, Microsoft Corporation (NASDAQ:MSFT) and International Business Machines Corp. (NYSE:IBM).

At first this might seem like a bout between two washed up has-beens. Both of these companies are ancient by tech company standards, and neither gets the headlines they used to. Yet longevity in the tech space is something to take seriously. If you’re able to survive decades in an industry known for rapid upheaval, you’re clearly doing something right.
Yet no fighter’s streak lasts forever. Even Mike Tyson eventually got knocked out, by underdog Buster Douglas. And in our match today, one company is well into a bona fide comeback, whereas the other is at risk of getting knocked out … permanently.
So with that, let’s go ringside in this battle between IBM stock and MSFT stock starting with the current dividend yield.

Dividend Yield

In a world where the S&P 500 yields just 1.9%, both Microsoft and IBM have to be considered relatively high-yield stocks. Microsoft stock sports a dividend yield of 2.4% and IBM 3.2%. So, in a head-to-head match up, IBM is clearly the higher yielder.
Furthermore, at first glance, IBM’s dividend would appear to be more sustainable. IBM stock is only paying out 44% of current earnings per share, whereas MSFT is payout out a much higher 69%.
So, in round one of this dividend smackdown, we have a clear winner: Big Blue.
Dividend Yield Winner: IBM

Dividend Growth

For round two, let’s take a look at dividend growth. After all, the current dividend yield only gets you so far, as a dividend stock without a growing dividend is essentially just a riskier version of a bond. A good dividend stock should have both a respectable current yield and a dividend growth rate well in excess of inflation.
Well, both of our fighters qualify here. Microsoft has raised its dividend for 13 consecutive years, and IBM has raised its dividend for 17.
Over the past 10 years, both stocks have been aggressive dividend raisers, but one has clearly taken the lead. Microsoft has raised its payout by a cumulative 300%, which would crush nearly any competitor other than IBM. Big Blue has managed to raise its dividend a cumulative 400%.
Over the past five years, MSFT stock has the edge, beating out IBM stock by a cumulative 125% to 87%. But in round two, I’m going to have to give the edge to IBM.
Dividend Growth Winner: IBM

Future Prospects

Thus far, it has been a lopsided contest, with IBM taking the first two rounds. So is the match over? Or is Microsoft about to mount a comeback worthy of Rocky Balboa?
Let’s take a look.



3 Blue-Chip Technology Stocks That Will Break Through the Ceiling

Nothing will stop these technology stocks anytime soon

U.S. equities are trading mixed on Friday on light volume, with the Dow Jones Industrial Average stalling in the doldrums between its 20-day and 50-day moving averages.
Source: Shutterstock
The Federal Reserve remains in focus, with the PCE inflation rate topping 2% for the first time in almost five years, increasing the odds of an aggressive pace of rate hikes through the end of the year.
And the political headwinds remained focused on the gridlock in Washington threatening to stall any tax reform efforts.
But after a relatively subdued March, by many measures, stocks have worked off some of the speculative excess seen at the end of February. As a result, a number of stocks in key leading sector groups like industries, financials and technology are pushing higher.
Here are three big technology stocks on the move: