4 Dow Stocks You Need to Watch in March
byMar 3rd 2013 9:00AM
One benefit of following the Dow Jones Industrials is that there's always something going on with the 30 companies that make up the average. As the leaders of the U.S. economy and with presence throughout the world, the prospects of these companies have global implications for economic growth and prosperity.
With that in mind, I've picked four stocks from the Dow 30 that are especially worth paying attention to this month. Let's take a closer look at these companies to find out what's in store and whether they deserve a closer look as a possible investment.
After fighting reports of alleged corruption, the last thing Wal-Mart needed was another controversy. But conflicting news about the retail giant's prospects have investors watching the company to see which version of its story proves correct.
On one hand, Wal-Mart beat earnings estimates in its fourth-quarter report. The retailer posted 1.3% same-store sales gains, came out with a strong earnings report last month. But leaked internal emails among Wal-Mart executives referred to "disastrous sales" for the beginning of 2013, and that prompted the company to temper its guidance for the current quarter. Citing the two-percentage-point rise in payroll taxes, rising gasoline prices, and IRS delays in processing tax refunds, Wal-Mart's warning of flat sales for the quarter raised fears of whether a big financial hit to the retailer's customer base will mean a return to the falling same-store sales trends that lasted for years following the financial crisis.
Wal-Mart doesn't provide monthly same-store sales figures. But you'll want to watch closely for any further guidance from the retailer about the current quarter, especially as pressure continues to build on lower-income customers.
2. Home Depot
One of the biggest drivers of the stock market's rally lately has been the housing market, which has finally started picking up. Home Depot was a big beneficiary of that trend in 2012, and the company has continued to see its stock move higher on optimism for the future.
With its favorable earnings report last week, which included both a higher dividend and a new share-repurchase program, Home Depot is poised to take out its all-time record high of $70 per share. Yet at 23 times trailing earnings, the home-improvement retailer will need to see housing keep performing well to justify the lofty share price.
Once again, Disney is hoping for success from a March movie. Despite bad memories of 2012 box-office flop John Carter, Oz the Great and Powerful should have more box-office appeal when it comes out March 8, if only because of its connection to the much-loved 1939 classic Wizard of Oz. Yet with somewhat mixed reviews early on, investors will be watching the much-anticipated release very closely.
Long-term investors may secretly be rooting for a bad result from Oz to help send Disney's shares down temporarily. The real potential for Disney is in its future, with the Lucasfilm acquisition promising billion-dollar blockbusters for years to come and content deals starting to ramp up. With any luck, attentive investors may be able to take advantage of Wall Street tunnel vision and pick up shares at a bargain.
4. JPMorgan Chase
JPMorgan CEO Jamie Dimon is no stranger to controversy, and last week's news that the bank will cut 17,000 jobs in the coming two years again raised strong reactions from those who've criticized the outspoken executive in the wake of billions in losses from the London Whale scandal, despite Dimon's having taken a pay cut as a result of those losses.
But with the layoffs coming largely from the bank's mortgage business, which needs fewer people to process a falling number of loans in default, JPMorgan appears to be getting healthier. This month's release of bank stress test results should give confirmation of that trend and potentially set the stage for another round of dividend increases for bank shareholders across the industry. With financials having led the rally higher in stocks, watch closely for any signs that banking in general and JPMorgan in particular haven't improved as much as most investors believe.
Every Dow stock has interesting things happening with it. But by paying special notice to these four stocks, you'll potentially get a jump on your investing peers when big news breaks, and that can give you a valuable edge in your portfolio.
With big banks like JPMorgan Chase still trading at deep discounts to their historic norms, investors everywhere are wondering if this is the new normal, or whether finance stocks are a screaming buy today. The answer depends on the company, so to help figure out whether JPMorgan is a buy today, I invite you to read our premium research report on the company today. Click here now for instant access!
The article 4 Dow Stocks You Need to Watch in March originally appeared on Fool.com.Fool contributor Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Home Depot and Disney and owns shares of JPMorgan Chase and Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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