This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Charging Into Visa

NEW YORK ( TheStreet) -- I have written many articles about what a great stock Visa (V - Get Report) is. Well, somebody else must also think it is a great company because it was added to the Dow Jones Industrial Average Tuesday alongside Nike (NKE) and Goldman Sachs (GS).

Data from Best Stocks Now App

It isn't everyday a company gets to join the DJIA. If it does, it means that another company must go. After all, there is only room for 30 companies.

With Visa, Nike and Goldman Sachs added, Alcoa (AA), Bank of America (BAC) and Hewlett-Packard (HPQ) have been kicked to the curb. This is the biggest DJIA membership change to take place in almost 10 years. Alcoa has been a member for 54 years, HP for 16 Bank of America for five.

What took so long?

In my opinion, these stocks are getting kicked out because of their lousy performance against the market over many years. Again, what took so long?

Let's begin with Alcoa.

Data from Best Stocks Now App

Alcoa has returned an average of negative 10% per year over the last 10 years.

Over the last five years, it has done even worse than that. The stock has averaged negative 20% per year. It sounds like the folks at Dow Jones are picking stocks for their index just like many individual investors pick their own. Buy big, stodgy, old company of yesteryear with good name recognition- Microsoft (MSFT), Cisco (CSCO), Hewlett-Packard, etc. etc. etc.

It makes you wonder where the Dow would be today had it kept its index a little more current.

Let's next check out another exile: Bank of America.

Data from Best Stocks Now App

The shares have done a little bit better than Alcoa, but not by much. Shares have averaged negative 6.4% per year over the last 10 years, and that includes the dividends. The stock has delivered an average negative 14% per year over the last five years. In addition, the stock was down a gut-wrenching 63% in 2008! This is hardly normal "blue-chip" behavior.

1 of 4

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
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
V $65.41 -0.38%
AAPL $124.43 -1.54%
FB $82.22 -1.18%
GOOG $548.00 -0.73%
TSLA $188.77 -0.94%

Markets

DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs