Strong Earnings Push Coca-Cola and Johnson & Johnson Higher to Lead the Dow

Earnings season continues to impress, even if stocks aren't rising as a result.

Apr 15, 2014 at 3:30PM

The major U.S. stock indices are all back in the green in late trading following strong earnings from two of the best-known companies in the world. Coca-Cola (NYSE:KO) and Johnson & Johnson (NYSE:JNJ) reported slightly better than expected quarterly numbers, causing both stocks to pop.

The Dow Jones Industrial Average (DJINDICES:^DJI) had risen 0.51% after an up and down day. Fresh economic reports out today showed a 0.2% rise in the Consumer Price Index last month and a slight rise in homebuilder confidence at 47, still indicating that a majority of homebuilders see a poor market.  

Broadly, economic data has done little to inspire investors, although earnings continue to march higher.

Earnings season roars on
Johnson & Johnson surprised a lot of investors and analysts today in reporting a 3.5% increase in revenue in the first quarter, to $18.12 billion, and an 8% rise in adjusted earnings to $4.43 billion, or $1.54 per share. Both figures beat estimates.  

Prescription drugs were the most impressive with an 11% jump in revenue to $7.5 billion. The patent cliff hasn't hurt the company as much as expected, and we may be seeing the benefit of having more insured patients via Obamacare.


Coca-Cola is now being driven by healthier drinks like Minute Maid versus traditional Coke.

The best news of the day was an increase in forecast profit this year -- a range of $5.80 to $5.90 per share, up $0.05 from January.

Over at Coca-Cola, the slow decline of its traditional business continues, but the company beat expectations nonetheless. First-quarter revenue dropped 4% to $10.58 billion and net income fell 8.5% to $1.62 billion, or $0.36 per share.  

Global soda sales fell of the first time in 15 years in the first quarter, but volume of noncarbonated drinks such as Minute Maid, Powerade, and Honest Tea was up 2%.

The other challenge Coca-Cola faces as a global company is the strong dollar. Revenue would have grown 2% last quarter if it weren't for currency changes. If the dollar continues to be strong you can assume that this trend will continue.

The bottom line is that earnings look solid, if not spectacular, for the Dow so far in 2014.

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Travis Hoium manages an account that owns shares of Johnson & Johnson. The Motley Fool recommends Coca-Cola and Johnson & Johnson. The Motley Fool owns shares of Coca-Cola and Johnson & Johnson and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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