Why Verizon, Cisco Systems, and Visa Led the Dow Higher in May

Selling in May led to dismay for investors in the Dow Jones Industrials. Find out why these Dow components soared.

May 31, 2014 at 11:03AM

The Dow Jones Industrials (DJINDICES:^DJI) closed out May in record territory, gaining 136 points or about 0.8% for the month. Even though many investors remain convinced that a correction for the Dow is imminent, the bull market managed to defy the skeptics as a relatively strong first-quarter earnings season helped stocks advance. Among the Dow's top performers during the month were Verizon (NYSE:VZ), Cisco Systems (NASDAQ:CSCO), and Visa (NYSE:V).


Verizon gained almost 7%, with the Dow's telecom giant getting a big vote of confidence from major investors. Warren Buffett was the highest-profile purchaser of Verizon stock, buying about 11 million shares for roughly $500 million, but hedge-fund investors Dan Loeb and John Paulson have also made substantial purchases of Verizon. As Verizon has taken full control of its Verizon Wireless business, the telecom is betting on the success of the U.S. market and its ability to retain supremacy over the industry. With Verizon commanding substantial spectrum assets, it's in great position to build up its lead over its rivals both within and outside the Dow Jones Industrials.


Cisco CEO John Chambers. Source: Cisco Systems.

Cisco picked up 6.5%, with most of its gains coming after a solid earnings report. Even though the networking giant saw revenue decline and expects those declines to continue in its current quarter, investors took heart in the fact that revenue wasn't falling as much as they had feared. With CEO John Chambers finally starting to get optimistic about the company's future, especially its Internet of Things initiative and other forward-looking growth moves, Cisco Systems is in a better position to capture its share of the enterprise networking market. Moreover, if customers start spending more on IT infrastructure improvements, then Cisco should be able to benefit as well.


Visa rose a bit more than 6%, as the credit card network giant breathed a temporary sigh of relief after the situation between Russia and Ukraine became somewhat less tense over the course of the month. For a while, it appeared that because of the economic sanctions that the U.S. imposed against some of Russia's banks, Visa would have to limit its payment-processing activity in the Eurasian nation, and that response led to a dispute that might well have forced Visa and its peers to stop doing business in Russia entirely. However, with a compromise reached between Visa and the Russian government, Visa should still be able to take advantage of the profit opportunities in Russia as it moves toward greater emphasis on electronic payments.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems and Visa and owns shares of Visa. Try any of our Foolish newsletter services free for 30 days. 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.

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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