Why These 2 Dow Stocks Popped Higher Today

While investors were absolutely cheering the ECB’s bond-buying program earlier this month, they’ve quickly reverted to their old pessimism, and now the market is trading like Europe is back on the ropes.  

European stocks fell almost 1% today. Even the region’s strongest link right now, Germany, is showing cracks. The German business sentiment index fell again in September, the fifth straight month it’s done so. The index now trades at its lowest level since the beginning of 2010.

All this sourness dragged all three of the major indices lower this morning, only to see them regain most of the lost ground by late trading.

Index

Gain / Loss

Ending Value

Gain / Loss %

The Dow Jones Industrial Average (INDEX: ^DJI  )

-20.6

13,558

-0.15%

S&P (INDEX: ^GSPC  )

-3.26

1,456

-0.22%

Nasdaq

-19.2

3,160

-.60%

Even though it was a down day though, two dow stocks still managed to roar higher.

Pfizer (NYSE: PFE  ) rose a healthy 1% today, while JP Morgan (NYSE: JPM  ) climbed .9%.

Both of these stocks have done very well this year, posting 14% and 24% gains, respectively. Today’s impressive performance could just be the beginning, too.

In addition to Moody’s upgrading the creditworthiness of the big pharma industry as a whole, with favorable language about the sector’s ability to weather patent cliffs, Pfizer has the added catalyst of spinning off their animal health-care unit to unlock money that can be piled back into future drug development. Analysts have argued that the division has been severely undervalued for some time. The company has also weathered the loss of patent for their blockbuster drug Lipitor, while maintaining a strong pipeline of other drugs, and developing strategic relationships with other healthcare heavies like Johnson & Johnson (NYSE: JNJ  ) . Overall, Pfizer may look a little steep today, at 21.5 times earnings, but their monster dividend and long-term track record are worth paying up for.

JP Morgan continues to impress and has rebounded nicely from its London Whale trading loss that gave Jamie Dimon a black eye and savvy investors a beautiful entry point. The company is up 15% in the last three months alone, pays a great 2.9% dividend, and still trades for less than 10x earnings. Say what you will about future regulatory drag, the current interest rate spread is good news for big banks, and I think they’ll do very well over the next few years. JP Morgan is still a best-in-class operator, with world class management, and trading for a deep discount.

At the end of it all, it makes more sense for investors to be buying great companies based on those companies' merits, not whether the Fed loads its QEIII bazooka, or whether the ECB bails out XYZ nation. Pfizer and JP Morgan show that there are still great picks on the dow today, even when things are going poorly in Europe.

But, as good as they are, there are even better picks out there, including the three dividend aristocrats highlighted in our report, The 3 Dow Stocks Dividend Investors Need. In it, we highlight our three favorite Dow stocks that pay you, including one that I’ve put my own money behind. Click Here to Read More.

Austin Smith owns shares of Pfizer and Johnson and Johnson. The Motley Fool owns shares of JPMorgan Chase and Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson. Motley Fool newsletter services have recommended creating a diagonal call position in Johnson & Johnson. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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