The Dow Jones posted a loss on Friday of 303.68 points, its largest loss of the month. This came one day after President Obama made his speech regarding jobs that was encouraging yet reminded citizens of our desperation and need for drastic measures. The day's loss was a result of both the president's speech as investors may believe the proposal will not be approved along with additional fears of the European financial crisis spreading into the American markets.
All stocks that trade within the Dow Jones Industrial Average posted a loss on Friday, with 5 stocks posting a loss that accounted for over a third of the Dow total loss. Although these 5 stocks accounted for such loss I believe that each stock offers security, growth, and a current price to experience large gains. Below is a look at the 5 stocks that moved the markets on Friday and what it means for future performance.
International Business Machines Corp (IBM) posted a loss on Friday of 2.35% which accounted for 29.37 points of the Dow Jones loss. There was no significant news or key developments announced that would justify a loss of nearly $4 billion from its market cap therefore I conclude the reason for its loss was market related panic.
I believe that if you are going to panic, in fear of a recession, and sell a stock, IBM should be a stock that you hold. This company defines consistency, innovation, growth, and success. The company has strong and consistent management along with a market leading patent portfolio in which no other company can compare. The company has accomplished a high level of growth in all of its emerging markets making it difficult to find a region in which it's not relevant.
In regards to the company it's hard to identify a negative aspect, IBM is managed and operated in a way that produces the utmost success. It's returned consistent gains to shareholders of 27% over the last year and 100% during the last five. The company continues to become more effective in its operations consistently posting higher earnings year-over-year. At its current price of $161.37 it's $14 from its 52 week high which should give investors a good opportunity to buy at a cheap price.
I do not believe the loss today shows any relevance nor do I expect the stock to be heavily affected by the fear of a recession. To read more in detail regarding the strengths of IBM click here.
McDonald's Corporation (MCD) fell 4.04% on Friday resulting in a Dow impact of 27.10 points. The stock fell after the company released global sales for the month of August with a gain of 3.5%. It marked the 100th consecutive month of year-over-year sales, which I believe is an amazing accomplishment. However, the market was not as optimistic since Reuters expected sales to be 4.3%.
I believe the company's results were encouraging especially considering the disastrous month of August which included a hurricane on the east coast that heavily weighed on sales in one of MCD strongest regions. I find the drop in stock price to be irrelevant as the company's still on pace to post earnings that significantly outperform year-over-year, along with it trading only $6 from its all time high. The stock was trading near these all time high levels to end the month of August and I expect the company to surpass these prices in the immediate future.
The stock has gained 140% during the last five years trading with a solid uptrend. I believe the pullback on Friday gives investors the opportunity to buy this stock at a slightly cheaper price before earnings push it to all time highs.
Chevron Corporations (CVX) posted a loss of 3.27% on Friday resulting in a Dow impact of 24.37 points. I believe the company's loss was a direct result of commodities, with crude and gas both posting substantial loss.
I expect for crude to rise over $100 within the next few months, as the markets improve, which should have an impact on the Chevron stock. The stock was trading at all time highs during the month of July and then fell with the market and lower commodities.
With no fundamental reason for the loss I believe the price offers the investor a great opportunity to see large gains, from a low risk investment, with a solid dividend.
Caterpillar Inc (CAT) posted a loss of 3.54% on Friday resulting in a Dow impact of 23.31 points. Caterpillar has posted a large amount of loss over the last month as consumer confidence, manufacturing, and construction have all declined with the market.
Yet Caterpillar announced today that it has a shortage of employees despite these low economic indicators. This leads me to believe that Caterpillar is growing and that low indicators are not affecting its individual performance. I believe the fact that the company is understaffed along with it increasing guidance in July further adds to my belief that CAT is growing not regressing.
With a price of $83.96 I believe this stock is presenting among the best opportunity of any stock being traded in the market. I anticipate very strong earnings which should provide gains from current levels and future long term growth as the construction industry improves.
3M Company (MMM) lost 3.29% on Friday resulting in a Dow impact of 19.75 points. The company released no significant news or key developments that would cause the stock to post loss. Therefore, I assume the loss was related to the market outlook and fear among investors.
The company is involved with many areas of business as it provides innovating products and services to 6 segments and multiple branches. The company has experienced a high level of growth over the last two years with 2011 on pace to report record full-year earnings.
I expect the stock to rise from this point as fundamentals continue to improve.