Posts Tagged ‘large-cap companies’
What Companies’ Earnings Are Telling Us About Where the Market is Headed
By Mitchell Clark, B.Comm. for Profit Confidential
Most large-cap companies are not reporting great earnings, and this makes sense. You can’t have runaway earnings in an economy with very slow growth. But corporations are increasing their dividends and improving their balance sheets. If it matters to individuals, large-cap corporations are looking great and any pick-up in business will go right to the bottom line.
Canadian National Railway Company (NYSE/CNI), a company with an excellent track record of making money on the stock market, just reported solid earnings that met consensus. The company announced an increase in its quarterly dividend by 15%, representing the 17th time it has done so since 1995.
Of course, the stock market is taking all the earnings news with a grain of salt. No one company is blowing the doors off Wall Street estimates. According to the numbers I’m reading, corporations are once again being highly conservative with their earnings outlooks for the rest of the year. They have to be, because there’s very little in the way of real economic growth available.
Johnson & Johnson (NYSE/JNJ), which is a great benchmark stock, reported fourth-quarter revenues just shy of consensus. The company’s 2013 full-year earnings forecast also came in just below current consensus. Still, Johnson & Johnson’s largest business—medical devices and diagnostics—grew to $7.4 billion, for a solid gain of 13.7%. On the stock market, Johnson & Johnson has been doing well lately. The company’s long-term stock chart is featured below:
Chart courtesy of www.StockCharts.com
Most big brand-name companies are holding their earnings with modest revenue growth. It will be very interesting to see what happens when we get into large-cap technology … Read More
Great News for Large-Cap Tech
By Mitchell Clark, B.Comm. for Profit Confidential
Who has all the money these days? While the government has most of it and can make more of it when it wants, it also owes a lot of money. Rather, large corporations are best off these days, and they aren’t investing much in new plant, equipment, and/or employees. But there is hope out there in the universe of cash-hoarding corporations, and that great hope is in enterprise information technology (IT). Forget retail technology; it’s the enterprise-level IT suppliers that stand to be the big beneficiaries of corporate spending over the next several years.
For a corporation, things are very simple. Company management might ask: should we build a new plant for a new line of windmills? The answer, of course, would be “No,” and they’d then contract it out to China. They ask: should we hire a few more people in the sales department, customer service, or IT support? “Maybe,” they’d answer, “but no full-time employees and let someone else handle payroll.” Management decides they really need to update the company’s e-commerce efforts, asking: should we hire more computer programmers? “No” would be the answer again and they’d contract it out to India. So, who wins in a system like this?
We know the outsourcing corporation wins—it’s winning already. Within this system, though, there are players that are required for it all to work seamlessly and efficiently, the one group poised to benefit from it all: application software, database management, server and storage, cloud and IT “strategy alignment.”
The cash hoard is about to be unleashed, but on enterprise IT, not new plant or equipment, and … Read More
A Bear Market for Stocks? Not for These Two Companies
By Mitchell Clark, B.Comm. for Profit Confidential
Hindsight is always 20/20 when it comes to the stock market, and it’s impossible to be right with your picks all of the time. Recently, in this column we’ve been looking at a number of large-cap companies that I view as being worthy of consideration when they’re down in value on the stock market.
One of the most successful initial public offerings (IPOs) in recent history is MasterCard Incorporated (NYSE/MA). Among large-cap companies, this one only pays a very small dividend, but it’s been a powerhouse wealth creator on the stock market. The stock just hit an all-time record high, and while it did pull back with the broader market during the financial crisis of 2008/2009, it’s been going virtually straight up since being listed in 2006. I remember when both MasterCard and Visa Inc. (NYSE/V) listed on the stock market, and I thought that they would both make for good investments. What a mistake it was not buying shares in these companies. MasterCard’s stock chart is featured below:
Chart courtesy of www.StockCharts.com
MasterCard is now a $65.0-billion company. The stock doubled over the last year and a half, and it tripled over the last three and a half years. A lot of investors might not think those kind of returns are available from large-cap companies, but obviously, the market proves they’re wrong.
Another powerhouse wealth creator among large-cap companies is Alexion Pharmaceuticals, Inc. (NASDAQ/ALXN), which doubled in value on the stock market over the last year and a half. (Alexion has recovered from every major price retreat it experienced over the last 10 years.) Pharmaceutical and biotechnology … Read More
Why Dividend Increases and Stock Buybacks Will Continue
By Mitchell Clark, B.Comm. for Profit Confidential
A number of large-cap, international companies reported third-quarter earnings that were below expectations. On the stock market, their shares went down accordingly and so did earnings outlooks for the rest of the year. But for a number of these companies, Wall Street analysts are now raising their earnings outlooks for the fourth quarter of 2012 and fiscal 2013.
One company where the increased earnings outlooks have been pronounced is E. I. du Pont de Nemours and Company (NYSE/DD). Ever since its third-quarter earnings report, du Pont’s shares have being going down in value on the stock market. The stock recently bounced off its 52-week low, but earnings estimates have been going up across the board for this year, the first quarter of 2013, and all of next year. The company’s stock market chart is below:
Chart courtesy of www.StockCharts.com
While business conditions aren’t likely to have changed much over the third quarter of 2012, blue chips have been so cautious with their earnings outlooks that the Street is now betting on “outperformance.” As we all know, corporate earnings are managed, but somehow the systems seem to work. Besides, all investors really care about is growth.
Another large-cap that’s experience a revival in earnings estimates is NIKE, Inc. (NYSE/NKE). With slow economic growth in Europe and China, the company’s earnings weren’t that great in its latest quarter. (See “World Hurting U.S. Revenues, But U.S. Economy Holding up Earnings.”) On the stock market, NIKE has been in consolidation for the last six months. The company’s next earnings report comes out today, and it will be really interesting to see what … Read More
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