This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Buy Dow Growth Stocks on Debt-Ceiling Fear

BOSTON ( TheStreet) -- A culmination of negativity is weighing on stocks. A pending debt ceiling breach in the U.S. is perhaps the greatest contributor to investor pessimism.

But, it isn't time to abandon equities, especially given that the 10-year Treasury is yielding a paltry 2.9%. It may be best to look at international growth stocks.

Safe telecoms and utilities still offer value, with their high-yielding shares providing a steady stream of return, even if the market languishes. However, the true value remains in Dow equities. So far this earnings season, aluminum specialist Alcoa (AA) doubled its year-over-year sales. And, today, JPMorgan Chase (JPM) exceeded analysts' consensus earnings estimate by 13% on improving credit trends.

What's becoming increasingly clear, on a global basis, is that companies are exceptionally healthy and functional, whereas governments have proven incompetent in solving their fiscal problems. The latter is weighing on investors, who should purchase the shares of safe, internationally diversified companies, which can deliver top- and bottom-line growth.

The five cheapest Dow components, currently, based on forward earnings multiples, are: Hewlett Packard (HPQ), Bank of America (BAC), JPMorgan Chase (JPM), Chevron (CVX) and Pfizer (PFE). Also, the five highest-yielding Dow stocks are: AT&T (T), Verizon (VZ), Merck (MRK), Pfizer (PFE) and Johnson & Johnson (JNJ).

However, on the basis of international exposure and economic trends, the two most attractive Dow stocks currently are: Chevron (CVX) and Caterpillar (CAT). Chevron is the world's second-largest energy company, after Exxon (XOM), and has been a top performer in the benchmark index, having advanced 44% in the past 12 months and 15% in 2011 as crude oil has remained near $100 a barrel, a sweet spot for exploration and production companies.

With global demand continuing to increase as emerging markets flourish, integrated oils are still must-own stocks, regardless of domestic economic uncertainty. Chevron is both cheap and highly rated. It trades at a forward-earnings multiple of 8.4 and a cash flow multiple of 6.4, 33% and 34% discounts to oil-and-gas peer averages. About 77% of researchers following Chevron rank its stock "buy" and the remaining 23% rate it "hold." Analysts expect the company to have grown second-quarter earnings 33% to $3.59 and sales 28% to nearly $63 billion. Chevron will announce its quarterly performance on July 29th at the open.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs