Caterpillar, Intel Have Led the Dow 30 Higher as Earnings Begin

NEW YORK (TheStreet) -- Quarterly earnings for the stocks in the Dow Jones Industrial Average began when Nike (NKE) reported its latest results on June 26. Nike earned 78 cents per share, beating analysts estimates by 2 cents. I guess we can thank the World Cup.

The biggest year-to-date gainers are Caterpillar (CAT), up 22%, followed by Intel (INTC), up 20%. There are 10 year-to-date losers, with Boeing (BA) providing a drag of 5.8%.

The Dow Jones Industrial Average set a record intraday high at 17,074.65 on July 3, and today I provide a Dow 30 Scorecard and include analysts earnings per share estimates, the date each company reports and whether or not the report is before the open or after the close.

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The first "Crunching the Numbers" table below shows that 22 of the Dow 30 are above all five key moving averages. I show that 13 stocks have overbought 12x3x3 weekly stochastics, eight have rising readings and eight have declining readings. International Business Machines (IBM) has an oversold reading that should begin to rise this week as last week's close was above its five-week modified moving average at $185.45.

Only five Dow components ended last week below their five-week MMAs: Boeing below $130.88, Du Pont (DD) below $67.19, McDonalds (MCD) below $101.17, United Technologies (UTX) below $116.54 and Walmart (WMT) below $76.17.

The second "Crunching the Numbers" table shows that July 15 is the next day for Dow earnings. Goldman Sachs (GS), Johnson & Johnson (JNJ) and JPMorgan Chase (JPM) report before the opening bell and Intel after the closing bell.

The last Dow stock to report is Home Depot (HD), which does not release its quarterly earnings until before the opening bell on Aug. 19. Following this report I will publish the next Dow 30 Scorecard tracking the winners and losers since July 3.

On June 2, I wrote, "7 Stocks That Will Lift the Dow Jones Industrial Average to New High," and here are fresh profiles for these seven Dow stocks.

Du Pont ($65.80) proved to be a drag, down 5% since May 30 after setting a multiyear intraday high at $69.75 on June 9. The weekly chart is negative with its five-week modified moving average at $67.19. An annual value level is $53.11 with quarterly and semiannual risky levels at $67.23 and $69.18, respectively.

Disney (DIS) ($86.84) is up 3.4% since May 30, setting a record intraday high at $86.98 on July 3. The weekly chart is positive but overbought with its five-week MMA at $83.64. Semiannual value levels are $84.49 and $71.57 with quarterly and monthly risky levels at $87.98 and $90.57, respectively.

Intel ($31.14) is up 14% since May 30 setting a multiyear intraday high at $31.35 on July 3. The weekly chart is positive but overbought with its five-week MMA at $29.02. Semiannual and monthly value levels are $29.79 and $28.06, respectively, with a weekly risky level at $31.31.

Johnson & Johnson ($105.42) is up 3.9% since May 30 setting a record intraday high at $106.25 on July 3. The weekly chart is positive but overbought with its five-week MMA at $102.91. Monthly and semiannual value levels are $102.69 and $101.33, respectively, with weekly and quarterly risky levels at $106.61 and $108.81.

Microsoft (MSFT) ($41.80) is up 2.1% since May 30 setting a multiyear intraday high at $42.29 on June 27. The weekly chart is positive but overbought with its five-week MMA at $41.14. Quarterly and annual value levels are $39.45 and $33.46, respectively, with a semiannual pivot at $41.67 and weekly and monthly risky levels at $43.19 and $43.98, respectively.

Travelers (TRV) ($94.84) is up 1.5% since May 30 setting a record intraday high at $96.18 on June 20. The weekly chart is positive but overbought with its five-week MMA at $93.17. Monthly and semiannual value levels are $92.88 and $88.50, respectively, with weekly and semiannual risky levels at $96.99 and $99.73, respectively.

Exxon Mobil (XOM) ($102.59) is up 2% since May 30 setting a record intraday high at $104.61 on June 23. The weekly chart is positive but overbought with its five-week MMA at $101.59. Weekly and semiannual value levels are $101.58 and $100.68, respectively, with an annual pivot at $103.05, and quarterly and monthly risky levels at $103.19 and $107.92,

Crunching the Numbers With Richard Suttmeier: Moving Averages & Stochastics

This table provides the technical status for the stocks profiled in today's report.

There are five columns with moving average titles: Five-Week Modified Moving Average; 21-Day Simple Moving Average; 50-Day Simple Moving Average; 200-Day Simple Moving Average; and the 200-Week Simple Moving Average.

The column labeled 12x3x3 Weekly Slow Stochastics shows the pattern on each weekly chart with a reading of oversold, rising, overbought, declining or flat.

Interpretations: Stocks below a moving average are listed in red.

Five-Week Modified Moving Average (MMA) is one of two indicators that define whether a weekly chart profile is positive, neutral or negative. The other is the status of the 12x3x3 weekly slow stochastic.

A stock with a positive technical rating is above its five-week MMA with rising or overbought stochastics.

A stock with a negative technical rating is below its five-week MMA with declining or oversold stochastics.

A stock with a neutral technical rating has a profile that is not positive or negative.

The 200-Week Simple Moving Average (SMA) is considered a long-term technical support or resistance level and as a "reversion to the mean" over a rolling three- to five-year horizon. (Even Apple (AAPL) declined to its 200-week SMA in June 2013.)

The 21-Day Simple Moving Average is a short-term technical support or resistance used by many hedge fund traders to adjust positions. A stock above its 21-day SMA will likely move higher over a rolling three- to five-day horizon and vice versa.

The 50-Day Simple Moving Average is also a technical support or resistance used by many strategists and commentators in financial TV.

The 200-Day Simple Moving Average is another technical support or resistance level, and I consider this level as a shorter-term "reversion to the mean" over a rolling six- to 12-month horizon. (Even Apple tested or crossed its 200-day SMA in nine of the last 10 years.)

Crunching the Numbers With Richard Suttmeier: Earnings & Where to Buy & Where to Sell

This table presents the EPS estimates including date and before or after the close, and where to buy on weakness and where to sell on strength.

"EPS Date" is the day the company reports its quarterly results.

"EPS Estimate" is the EPS estimate from Wall Street analysts.

Value Levels, Pivots and Risky Levels are calculated based upon the last nine weekly closes (W), nine monthly closes (M), nine quarterly closes (Q), nine semiannual closes (S) and nine annual closes (A). I have one column for pivots, which is a magnet for the period shown. The columns to the left of the pivots are first and second value levels. The columns to the right of the pivots are first and second risky levels.

Investors who wish to buy a stock should use a good-'til-canceled limit order to buy weakness to a value level. Investors who want to sell a stock should use a GTC limit order to sell strength to a risky level.

At the time of publication the author held no positions in any of the stocks mentioned.

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This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff


Now let's look at TheStreet Ratings' take on some of these stocks.

TheStreet Ratings team rates CATERPILLAR INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate CATERPILLAR INC (CAT) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, solid stock price performance and growth in earnings per share. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CAT's revenue growth has slightly outpaced the industry average of 6.2%. Since the same quarter one year prior, revenues slightly increased by 0.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 32.83% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CAT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $1,897.00 million or 33.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -3.24%.
  • CATERPILLAR INC has improved earnings per share by 9.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CATERPILLAR INC reported lower earnings of $5.75 versus $8.49 in the prior year. This year, the market expects an improvement in earnings ($6.20 versus $5.75).

TheStreet Ratings team rates INTEL CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate INTEL CORP (INTC) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, INTC's share price has jumped by 30.60%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, INTC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 1.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • INTC's debt-to-equity ratio is very low at 0.23 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, INTC has a quick ratio of 1.68, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for INTEL CORP is currently very high, coming in at 74.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.12% trails the industry average.

Richard Suttmeier is the chief market strategist at ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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