Do investors have a reason to worry?
Yet again, it depends on what your investing timeframe is. For short-term investors, Pfizer may cause shareholders fits, with Lipitor’s expiration still stinging and blockbuster pain drug Celebrex due to lose patent exclusivity in December 2015 after a one-and-a-half-year extension in March. Over the long run, Eliquis and Pfizer’s remaining pipeline may prove more than enough to continue to pump out steady profits, and short-sellers would be wise to keep their distance.
United Technologies Corporation (NYSE:UTX)
Why are short-sellers avoiding United Technologies Corporation (NYSE:UTX)?
Despite serving the building and aerospace industries, which are quite prone to hiccups related to lower government spending, United Technologies silenced pessimists in the first quarter by reporting an adjusted EPS increase of 16% and reaffirming its full-year EPS outlook. What weakness had been expected in the U.S. appears to be more than made up by growth in its equipment orders aboard — especially in China.
Do investors have a reason to worry?
United Technologies is more of a macroeconomic global play than anything else. Unless we see a rapid deterioration in Europe’s economy, or we see China’s GDP break into the 5% GDP growth range (about half its 30-year average growth rate), then shareholders probably don’t have too much to worry about. Keep an eye on growth rates in China, as they’ll probably dictate where United Technologies heads next.
Wal-Mart Stores, Inc. (NYSE:WMT)
Why are short-sellers avoiding Wal-Mart Stores, Inc. (NYSE:WMT)?
The thesis for why pessimists avoid Wal-Mart is relatively simple: It’s the largest retail chain in the world, and it commands incredible pricing power that can squash a good chunk of its competitors. Wal-Mart provides investors with predictable cash flow stemming from the fact that more than half of its revenue comes from the grocery aisle. As a one-stop-shop for nearly everything, it certainly doesn’t offer short-sellers a compelling reason to bet against it.
Do investors have a reason to worry?
This might be the one case among these five companies where investors should be showing signs of concern. Wal-Mart may the “low-price leader,” but even it is having trouble with higher payroll taxes and delayed tax refunds because of IRS furloughs eating into its bottom line. Wal-Mart is a good indicator for retail sales in our economy, and its 1.4% same-store sales decline in its latest quarter may not bode well for the retailer in the interim. Wal-Mart isn’t particularly expensive at 13 times forward earnings, but its revenue growth rate of 4% certainly leaves a lot to be desired.
Which most loved Dow Jones component do you think has the best chance at moving decisively lower? Share your thoughts in the comments section below.
The article The Dow’s 5 Most Loved Stocks originally appeared on Fool.com and is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.The Motley Fool recommends Coca-Cola.
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