Amid Apple Addition, Best & Worst Performing Dow Stocks
March 9, 2015 5:11 PM
Amid Apple Addition, Best & Worst Performing Dow Stocks
When S&P Dow Jones Indexes announced that Apple would replace AT&T in the Dow Jones Industrial Average, many retail investors took notice.
Apple is being added on the day that Dow component Visa institutes a four-for-one split. Because the Dow is price weighted, Visa will go from 9.71% of the benchmarks weighting to 2.53% (pro forma). And, despite Apples addition, the Visa split will cause the information technology sector to decline from a weighting of 19.17% to a pro forma 17.05%.
If your clients buy individual stocks, the following charts will show them how Apple and AT&T have fared over the past few years. In addition, weve included data on the four best and four worst performers among the Dow 30 over the past 12 months (as well as annualized data for the past three and five years) ended March 6, the day that Apples impending membership in the exclusive club was announced. Data on index weightings is as of March 5. Joseph Lisanti
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Sources: Morningstar; S&P Capital IQ; S&P Dow Jones Indices.
Image: Bloomberg
Apple is being added on the day that Dow component Visa institutes a four-for-one split. Because the Dow is price weighted, Visa will go from 9.71% of the benchmarks weighting to 2.53% (pro forma). And, despite Apples addition, the Visa split will cause the information technology sector to decline from a weighting of 19.17% to a pro forma 17.05%.
If your clients buy individual stocks, the following charts will show them how Apple and AT&T have fared over the past few years. In addition, weve included data on the four best and four worst performers among the Dow 30 over the past 12 months (as well as annualized data for the past three and five years) ended March 6, the day that Apples impending membership in the exclusive club was announced. Data on index weightings is as of March 5. Joseph Lisanti
Scroll through or click here to view a single page version.
Sources: Morningstar; S&P Capital IQ; S&P Dow Jones Indices.
Image: Bloomberg
Apple (AAPL)
The worlds biggest company by market capitalization is valued at more than $737 billion. But when its added to the price-weighted Dow after the close of trading on March 18, Apple will rank fifth behind Goldman Sachs, 3M, IBM and Boeing, all of which have higher share prices. Apples 12-month total return of 69.45% easily outpaced the returns of all current DJIA members.
AT&T (T)
Casual investors may think that AT&T has been in the DJIA for almost a century. American Telephone & Telegraph was added in 1916, changed its name to AT&T Corp. and was removed from the Dow in 2004. SBC (née Southwestern Bell), one of the baby Bells that AT&T was forced to divest in 1984 as part of a government breakup of Ma Bell, was added to the Dow in 1999. In 2004, SBC acquired its former parent and took the name AT&T Inc. Its removal will leave Verizon as the only telecom services company in the DJIA.
Best performer: Cisco Systems (CSCO)
A Dow component since 2009 when it replaced General Motors, Cisco Systems had a total return of 36.04% for the year ended March 6. The worlds largest maker of networking equipment, including switches and routers used in global communications, CSCO paid its first dividend in 2011 and has since increased it by 600%. Ciscos relatively low share price gives it a weighting of just over 1% of the Dow.
Best performer: Intel (INTC)
Shares of Intel, the biggest maker of microprocessors for personal computers and other devices, posted a total return of 38.47% over the past 12 months. After fluctuating in a narrow range for several years, Intels per-share cash flow rose almost 16% last year. INTC should account for about 1.24% (pro forma) of the weight of the DJIA when changes go into effect after the close of trading on March 18.
Best performer: Home Depot (HD)
The home improvement retailers shares returned 41.16% over the past year, outpacing most of its Dow peers. It is the leading player in the $300+ billion U.S. home improvement market. After falling in the wake of the financial crisis, Home Depots revenues have advanced for four consecutive years. On a pro forma basis, HD shares will represent 4.28% of the reconstituted DJIA.
Best performer: UnitedHealth Group (UNH)
A major player in the managed health care industry, UNH has expanded its public health care exchange business to 23 states this year. In 2014, UNH saw good growth in its Medicare and Medicaid businesses and it its pharmacy benefits unit. Investors were impressed and bid up the shares. The result was a 47.20% total return and a pro forma weighting of 4.23% of the newly configured Dow.
Worst Performer: Chevron (CVX)
The drop in oil prices hurt the energy sector and Chevron, the worlds fifth largest publicly traded oil company, was no exception. The integrated oil giant posted a total return of -6.11% for the year ended March 6, 2015. Chevron made major share repurchases in 2012, 2013 and 2014. With cash flow squeezed by the oil price decline, CVX suspended its buyback program this year.
Worst Performer: IBM (IBM)
IBM provides computers, software and services in more than 170 countries worldwide. Revenues have declined for three years in a row and the consensus of Wall Street analysts is for another decline in 2015. The stocks return was -13.18% over the past year. In terms of share price, IBM ranks third in the Dow, giving it a pro forma weighting of 5.95% in the new configuration of the DJIA.
Worst Performer: American Express (AXP)
This provider of premium charge cards and travel services has endured a recent spate of negative news. A federal judge ruled against AXP in an antitrust case, which the company plans to appeal. And both Costco and JetBlue Airways have announced the end of their deals with AXP. The shares posted a one-year return of -13.40%.
Worst Performer: Caterpillar (CAT)
The worlds largest producer of earthmoving equipment also makes power generators and mining equipment. Global economic weakness and a severe downturn in mining and oil markets have hurt CATs sales. Revenues declined more than 15% in 2013 and were down slightly in 2014. The shares had a one-year total return of -15.20%.
