Can the Dow Jones stay above 10,000?
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The Dow closed above 10,000 Wednesday for the first in over a year on a JP Morgan Chase increased profit report, Intel's increase in chip orders, and good news on the unemployment front. The number of initial unemployment claims dropped unexpectedly last week to the lowest number since January. Another optimistic report came as the number of people collecting long-term unemployment benefits dropped 75,000 to 5.99 million in the week ended Oct. 3. On Thursday the price of oil climbed above $77 a barrel after government reports showed a drop in stockpiles and lower than expected rise in crude inventories.
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The Dow Jones finally crossed the 10,000 barrier. Investors putting big money back in the market are making it hard to find good companies that aren't overbought. So instead of chasing chart performance, we are looking at a solid company that seems to be forgotten in the rally by some investors. With the price of oil rising over $77/barrel it won't be long before analysts start recommending some of the oil giants again and this is the top dog with numbers that don't stop delivering. The Bearish pick is a company that has enjoyed a really nice rise over the last few months, but it seems like the worse of the 3 big companies in this sector. The market rally has been kind to this company and it may even continue if investors continue to put money in the market, but this stock looks poised to fall fast if there is a slight pull back. |
 Exxon Mobil (XOM) - Exxon quitely has overtaken PetroChina as the most valuable company in the world. Year to date, Exxon Mobil is still down 14 percent, the worst performance among 7 integrated oil companies in the Standard & Poor’s 500. Meanwhile, Exxon Mobil’s revenue and profits have increased 60% and 79% respectively in the last 5 years. Exxon has a healthy profit margin and return on equity of 8.65% and 13.89% respectively and maintains an above average earnings yield of 9.28%. Debt is basically non-existent compared to its cash on hand, and XOM pays a nice dividend.
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 OfficeMax, Inc. (OMX) - This Company’s stock has increased more than its competitors, in the last six months it’s up a staggering 280%. Understandably this stock had nowhere to go but up when it fell below $2 in March, but it seems overbought at this point when dig into the numbers. The recent upbeat estimates in profits shouldn't hide the fact that OfficeMax is still in decline and its debt to cash ratio is high. Even industry leader Staples (STPS) recently reported a 38% drop in profits as continued unemployment has dented the demand for higher ticket business machines, furniture and other durable bigger ticket items.
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