- companies that are way behind in the market and
- independent oils
Digging into the 5 Dow Laggards Posted at 1:19 p.m. EDT on Friday, Nov. 29 And then there were five. Just five companies in the Dow that are well behind the market, unable to struggle above double digits for the year. It's a tough benchmark. Many of the stocks in the averages are up huge. It has been a standout year.But IBM ( IBM), Caterpillar ( CAT), AT&T ( T), ExxonMoibil ( XOM) and Cisco ( CSCO) are all up less than double digits, with IBM down 6%; Caterpillar down 5%; AT&T up 5% and Exxon and Cisco up 8%. So, I think it is time to drill down at these underperformers and see what needs to be done. First, IBM is being challenged by the cloud. It's book of business isn't in tune with the simple, inexpensive nature of the cloud and the whole Watson thing, the race for most powerful, analytic computer, means nothing in this day and age where there are many companies that provide excellent data analytics. IBM offers the fabled one-stop shop and information technology outfits are increasingly going a la carte, which I saw at DreamForce, the Salesforce.com ( CRM) celebration of everything that is not IBM. Increasingly, IBM is perceived as being irrelevant and not offering a bargain to companies. Heavy hardware is unnecessary. IBM spends much of its free cash flow buying back stock to make the earnings with subpar or no revenue growth. It is a giant cyclical company without any growth.
Independent Oils Look Buyable Posted at 12:33 p.m. EDT on Wednesday, Nov. 27 Let's say Carly's right. I'm talking about Carly Garner, one of our best and most thoughtful technicians, who is predicting that oil can still fall. I agree with her about the vulnerability of the commodity and I also think that the stocks all "look" terrible. I know there will be plenty of bailers from these independent oils as we approach $90 and there will be out-and-out panic if we drop to that $86 level she says is possible. But I want to buy, not sell, these stocks. While I am distinctly getting the feeling that everyone in America -- perhaps save the president and Congress -- recognizes we have found a lot more oil than we thought, so the surprise factor is gone, I still think there's a huge scarcity factor. Put simply, there are a handful of companies that really have the right real estate and the right cost structure to make fortunes with oil at $86. But there are others who don't. As these stocks break down in this thin trading, we added to Occidental ( OXY ) because it has a refining operation that is worth more now than ever because of the expanding spreads and considering adding to Noble ( NBL ) because Noble has properties in Europe that are phenomenal and has the best land in the Niobrara. I am not saying that if you buy these stocks right now you will do well. This kind of action today presages a vicious move down, not up. I am saying that, like Carly said, we are readying for that move to BUY not sell stocks and that's the best approach to take. A really nimble person could sell here and buy back 3% from now. I can't be that nimble or that good, for that matter. Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.