3 Dow Stocks That Missed Out on May's Gains

The Dow finished May at a record high, but these stocks held the Dow back from even bigger gains. Find out about them here.

Jun 1, 2014 at 11:03AM

In May, the Dow Jones Industrials (DJINDICES:^DJI) managed to post another solid performance, rising 0.8% and finishing the month at its fifth all-time record high close for 2014. Yet even though the Dow followed the broader stock market higher, about a dozen Dow components lost ground in May, and IBM (NYSE:IBM), Pfizer (NYSE:PFE), and Wal-Mart (NYSE:WMT) were among the worst performers during the month.

Ibm Logo

Source: IBM.

IBM fell 5.6% for the month as the tech giant continues to face problems from intense competition in the tech industry. Shareholders can't complain about IBM's willingness to share its profits, with the company having boosted its dividend for the 19th consecutive year, this time with a whopping 16% increase. Yet even with substantial share repurchases and dividend payments, IBM has investors nervous about whether it will be able to refocus its attention on more profitable business lines, as recent drops in revenue necessitate IBM finding higher-margin sources of sales in order to keep earnings up. That will prove increasingly difficult as competitors all flock to those more lucrative areas, and some therefore have concluded that IBM's best days might be behind it.


Pfizer dropped 4.4% as its attempt to buy out British drugmaker AstraZeneca proved unsuccessful. The potential deal would have had a number of positive elements for Pfizer, including economies of scale and cost synergies, a unified pipeline with arguably better prospects for long-term growth, and the possible tax advantages of a change in tax domicile to the U.K., where tax rates are more favorable. With Pfizer having given up on a bid, investors will have to wait at least six months to see whether the U.S. pharma giant renews its attempts to merge with its British counterpart -- unless Pfizer makes a major move in another direction in the interim.


Source: Wal-Mart.

Wal-Mart declined 3.1% as the retail giant has once again had to deal with slowing sales and concerns about its long-term growth prospects. Same-store sales in the U.S. fell during every single quarter of Wal-Mart's previous fiscal year and again in the first quarter, and operating margins in its international business have dropped dramatically in the past year as well. The question in the long run is whether Wal-Mart can use smaller stores as a way to get shoppers to make more frequent purchases, but it'll take time to see whether that strategy is effective. Until then, Wal-Mart will have to make do with an increasingly uncomfortable situation that has some of its shareholders wondering whether the stock will hold up as well in a future downturn as it did during the 2008 financial crisis.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of IBM. 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.

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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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