Time to Buy DJIA Worst Stocks - BA, IBM, HD, INTC?
Time to Buy April's Worst-Performing Dow Jones Stocks?
The news article caught my attention.
Quite certain will be able to learn something off it and so I plunged headlong into the post.
Let’s go!
April 2024 was not a great one for the overall stock market and downright awful one for a handful of blue chip stocks.
Many investors know that big price drops can be good opportunities to buy stocks.
However, they should also be cautious about investing in struggling companies.
Aftercall, a stock’s current weakness may be an omen of what's to come.
How to know the difference?
Well, as part of homework, an investor will have to:
Dig deeper.
Consider the bigger picture.
Below are four of Dow Jones Industrial Average index biggest April 2024 losers.
They may be blue chips, but that does not necessarily make them great picks right now.
Dow's worst of the worst.
The DJIA fell about -5% in April 2024.
The setback is “mild” compared to losses suffered by some of its constituent stocks.
Shares of $Boeing(BA)$, $IBM(IBM)$ and $Home Depot(HD)$ have fallen nearly -13%.
Tech giant $Intel(INTC)$ saw its stock slide over -30%. (see above)
What Have Gone Wrong?
Above, please find DJIA index for April 2024 performance (Pink).
The 4 stocks covered in this post, performed poorly when compared to the DJIA index. (see above)
Boeing.
Aircraft maker Boeing's shares lost altitude all month long in April.
Its Q1 2024 earnings was released in 24 Apr 2024, validated the sell down.
Revenue fell -8% YoY - as design and manufacturing problems (with its newer 737 & 787 jets) continued to crimp demand.
Boeing also booked a heavy loss of -$355 million, reminding investors that these headaches aren't mere nuisances -- there's a clear financial cost to them.
The added disruption of an impending CEO switch does nothing to ease current situation
Current chief executive Dave Calhoun will be stepping down at the end of 2024.
International Business Machine Corp (IBM).
IBM's setback is also mostly earnings-related, although the announcement it will be acquiring cloud software company HashiCorp did not help to booster stock price.
Q1 2024 earnings of $1.68 per share topped estimates of $1.60.
But revenue of $14.46 billion fell short of Wall Street expectations of $14.55 billion.
While most analysts polled have largely been bullish about integrating HashiCorp into IBM's existing cloud software business, now might not be the ideal time to carry out the integration.
Many deemed the $6.4 billion offer for HashiCorp is rather pricey.
Home Depot.
For Home Depot, quarterly earnings is not the root cause for its poor April performance.
Blame macro environment instead.
Inflation was the root cause for Home Depot’s poor Q4 2023 showings.
It caused sales to fall by -3% YoY.
With everything remaining status quo, the situation at Home Depot has worsen due to:
Persistent inflation that would not cool.
Elevated interest rates, that is set to remain as such for the immediate future.
Intel Corporation.
Intel “crashed” in April due to its disappointing Q1 earnings.
Intel earnings vs LSEG consensus expectations:
Earnings per share: $0.18 adjusted vs. $0.14 expected.
Revenue: gained +9% at $12.72 billion vs $11.7 billion YoY, vs $12.78 billion expected.
Q2 2024 Forecast.
Earnings per share (forecast) : $0.10 vs $0.25 expected.
Revenue (midpoint forecast): $13 billion vs $13.57 billion expected.
Although revenue was higher, the chipmaker is still facing considerable challenges.
Its first-quarter’s Revenue fell just a bit short of analysts' estimates.
While its Q2 2024 Revenue forecast of between $12.5 billion and $13.5 billion was below the $13.6 billion consensus.
All these back-to-back disappointments is a stark reminder to shareholders of deeper-rooted problems facing Intel.
To buy, or Not to buy?
It is not a straight forward reply to the “buy or don’t buy” question.
This is because a single month’s performance does not tell the whole story.
There is a need to consider the bigger picture.
(a) Home Depot - Home Depot faces headwinds due to limited demand for new homes and home upgrades.
(b). Intel - Intel has struggled over the years, and its focus on building factories for its own technology may distract from its core business. Time is what it requires to “right the wrongs” accumulated over the years.
(c). IBM - has paid a premium for HashiCorp. Still, it could pay off given IBM’s track record with acquisitions. IBM’s software business generates steady cash flow; that is a good sign.
(d) Boeing - it’s stock price reflects its challenges. However with forecasts that the airline industry will need thousands of new planes in the next two decades, its future offers a glimmer of hope.
My viewpoints: (mine & mine only)
Are technical analysis (TA) and diving into a company’s financials, the “quantifiable” methods to determine if a company is of “investment” grade ?
How do we “find” the conviction to invest, even in a company that has been round the corners many times over eg. Intel ?
The lesson learnt is it is a fallacy to assume that a company can be “too big to fail”.
This means when it comes to investment, it is always important to keep track of a company’s progress to ensure that it remains on course and on track.
Even for a company like $Meta Platforms, Inc.(META)$ that crashed big time when it went “rogue” with the Metaverse.
Luckily, it managed to turn itself around when it shifted attention and focus to “artificial intelligence” because this is what consumers want and what businesses need.
All these clearly brings home the message that when it comes to investing, do not put all the eggs in one basket. There’s just too much risks!
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Do you think the investment mantra “Sell in May & Come back in Sep” applies?
Do you think both Boeing and Intel are worth a shot given the demand for these respective stock ?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Tire burst while landing so what Boeing is responsible common sense maintenance is buyers/ owners responsibility
It’s best to be patient now!
Value stocks outperform lately
Haha these are really the worst stocks
Pls help to "Re-post". Tks! Rating is important (to me).
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Great article, would you like to share it?
Great article, would you like to share it?