The 3 Worst Dow Stocks to Own Last Week

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

After another wild week on Wall Street, most investors should be rather happy this weekend, as two of the three major indexes ended the week higher. For the week, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) gained 1.09%, or 164 points, while the S&P 500 increased by 12 points, or 0.75%. The Nasdaq was the lonely loser, falling 15 points, or 0.41%.

The trading week started off with investors beginning to worry whether Congress and the White House would be able to compromise on a solution so that the U.S. won't default on its debt obligations. Discussions ensued on Thursday and Friday, and the markets reacted accordingly, even though no deal was struck. In the end, the Dow posted a mostly strong gain for the week, with only seven of its 30 components ending the past five trading days lower than were they had started.

Before we jump into the big losers, let's spend a brief moment on the Dow's top stock of last week: Procter & Gamble (NYSE: PG  ) , which rose 3.23% this past week. As volatility within the markets rises, investors typically move out of riskier investments and into more stable stocks like the consumer-goods giant, which also benefited from an upgrade from Wells Fargo, from "market perform" to "outperform." The analyst thinks that longtime -- and now recently returned -- CEO A.G. Lafley is doing a great job cutting the fat from the business and making the organization healthier for the long term. That surely helped the stock price, but it was just one analyst's opinion, so I wouldn't place a whole lot of weight on it.  

Last week's big losers
Coming in third place last week was Pfizer (NYSE: PFE  ) , falling 0.96%. On Wednesday, the company announced that its drug Xeljanz didn't shine as hoped. The drug, designed to treat chronic plaque psoriasis, failed to meet hopes of topping Amgen's Enbrel. In in the low-dose arm of the phase 3 trial results, patents taking Xelijanz didn't do as well as those who had taken Enbrel for 12 weeks. Even though the stronger dose did meet its goal of non-inferiority, the tests show that Pfizer may not have the blockbuster many investors were anticipating.  

In second place was DuPont (NYSE: DD  ) . Shares are up more than 28% year-to-date, while the Dow itself has only risen 16.28%, but DuPoint lost 1.22% over the past five trading days. There was really no major catalyst for the stock to fall this week, which means we could just be seeing investors pulling out of the stock before the Oct. 22 earnings report. As Monsanto, its closest competitor, takes the next step toward helping farmers with its recent deal to purchase Climate Corp., perhaps DuPont investors see this as a good time to cash in on their big winner before the competition presses DuPont's revenue streams.

And in first place, Merck (NYSE: MRK  ) lost 1.94% last week. The decline comes as the stock received not one, but two poor remarks from analysts. On Wednesday, Credit Suisse opened coverage on Merck and slapped it with a "neutral" rating. Then on Friday, Jefferies lowered its previous "buy" rating on the stock to "hold" and cut its price target from $53 to $50. Both analysts are concerned whether management can execute plans to cut costs, as revenue will probably be flat for the foreseeable future. While investors should always take analysts' opinions with a grain of salt, shareholders will want to pay attention to Merck's expenses in the coming quarters -- but these reports are no reason to sell shares today.

The other Dow losers this week:
(For more information on why shares of the other losers fell lower this past week, click on the links.)

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  • Report this Comment On October 12, 2013, at 8:06 PM, funfundvierzig wrote:

    As for DuPont, some of the fizz may be coming out of the Peltz bump. We believe the announcement this past summer that activist investor Nelson Peltz has taken a substantial stake in DuPont pumped DD up by as much as 8 to 10 points. Now it would appear that it may be more difficult than originally thought to break apart this intractably troubled Delaware conglomerate and release value. Recall that the first response of DuPont Chieftess Ellen Kullman as "Chair" of the DuPont Board of Directors was to lard herself with a $50 million platinum parachute, and likewise equally generous going-away gifts for a slew of DuPont under-bosses. That self-promoting, conflicted conduct does not inspire investor confidence.

    ...funfun..

  • Report this Comment On October 12, 2013, at 8:14 PM, funfundvierzig wrote:

    Other factors which may be pressuring a declination in double "D"...

    * Numbers for the Company's touted crown jewel, DuPont AG & NUT, may be softer than anticipated for Q3 2013 and 2H.

    * Looming are massive settlement costs for tens of thousands of claims in various federal and state courts across the land relating to DuPont's new product failure and consumer fraud, tree-killing Imprelis. We believe conservatively the ultimate total for this Imprelis litigation liability may tower to $2 billion or more.

    * DuPont Chieftess Ellen Kullman is determined to ditch chemicals and chemical-related materials. Most likely to be dumped is DuPont Performance Chemicals, which accounts for a full 20% of DuPont annual revenues, as well as about the last remaining business in which DuPont is the true global leader, namely TIO2, DuPont Titanium Technologies.

    Merely the observations and opinion of one individual retail investor with both long and short positions in DD...funfun..

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