The 2 Dow Stocks You Need to Know About Today

Here's the lowdown on today's news from Nike and DuPont.

Jun 27, 2014 at 1:00PM
Take The Long View

The Dow Jones Industrial Average (DJINDICES:^DJI) was down 35 points at 1 p.m. EDT Friday amid the backdrop of increased economic tensions in Europe. Ukraine today signed a trade pact with the European Union, ratcheting up tensions (again) with Russia. Ukrainian President Petro Poroshenko called this the "most important day for [the] country" since independence.

DuPont lowers guidance
The morning was not as upbeat for chemical and agricultural giant DuPont (NYSE:DD), which saw its stock drop by 4.7%. 

This sudden move lower is a reversal from what has been a rewarding year for investors in the company.

DD Chart

DD data by YCharts.

Management announced today that operating earnings for the second quarter and remainder of 2014 would be "moderately below" previous expectations. Last year, DuPont earned $1.28 per share in the second quarter, but management said this year's result will fall well short of that mark.

The company lowered full-year earnings expectations to between $4 and $4.10 per share. Prior to this announcement, most analysts had expected 2014 earnings of approximately $4.25 per share. 

Over the past five quarters, DuPont's earnings yield -- the ratio of its earnings to its enterprise value -- has fallen 8.32% to 5.81% as of March 31, 2014. By this measure, the stock may have been overly valued in the markets, compounding the effect of today's lower guidance. 

For investors, this ratio correlates to expected returns over the long term -- it shows how well the company will produce profits relative to your investment.

Nike bolts higher
In more positive news for investors, Nike (NYSE:NKE) jumped up over 1.6% by early afternoon Friday. Nike has been in the global spotlight over the past two weeks as billions worldwide tune into the World Cup in Brazil. 

Nike Soccer Fool Flickr

After the market closed on Thursday, announced a strong earnings beat for the company's fourth quarter, which ended on May 31. 

Sales increased by 11% to $7.43 billion, beating expectations by nearly $100 million. Net income jumped 5.4% per share to $0.78. 

The better than expected revenue and earnings were in part driven by increased running and basketball-related sales in North America. This corresponds to the busy spring basketball season featuring the NCAA tournament in March and April and the beginning of the NBA playoffs. Runners also hit the pavement again after this year's particularly harsh winter.

Nike stock has risen 26% over the past 12 months, even though the ride higher has been noticeably more rocky than DuPont's.

NKE Chart

NKE data by YCharts.

Nike trades at 27 times trailing 12-month earnings, according to data from Yahoo! Finance, a hefty price for a $68 billion clothing and sporting goods company. This value premium is likely to persist over the next few quarters as Nike stays on center stage during and after the World Cup.

You can't afford to miss this
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Jay Jenkins has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike. 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. 

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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." 

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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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