My Dow Report Card (Part 2)

 | Feb 02, 2014 | 6:00 AM EST
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Now the C's

16. Nope, the market hated Intel (INTC). Nothing it liked. Didn't like personal computers. Didn't like the plans to get rid of extraneous businesses. Didn't like the fact that the company is actually predicting a good year but nothing that can't be beaten, for once. Its biggest issue: a huge number of upgrades going into the quarter without an upside surprise. We bought yesterday for the trust. Why not? It is de-risked and yields a very safe 3.65%.

17. Did anyone even care that McDonald's (MCD) disappointed AGAIN? I can't think of a reason to buy it at $93, but nobody seems to be able to find a reason to sell it, which is perhaps because of its above-average yield. McDonald's is always one quarter's worth of good numbers away from $100 and that's how I would approach this stock.

18. When I went over AT&T (T), I have to tell you that I was pained to think that it was nearly as bad as the naysayers on the conference call thought. There's no worry about the dividend here, given the bountiful cash flow, but management seemingly couldn't convince anyone of that and that's why the stock has been a huge bust. But it's the highest yielder in the Dow at 5.5% and I didn't hear a thing that made me feel like it can't boost that dividend. Yes, there could be some M&A here with Vodaphone, but the growth that would come from that acquisition would send the stock higher, not lower.

19. I am giving Boeing (BA) a C because the guidance was so horrendous. But people expected much more, hence the decline to $129 from $144. When I listened to Doug Parker, the CEO of the new American Airlines (AAL) last night, I know it would buy every plane it could get its hand on and Dave Cote, the CEO of Honeywell, which makes the cockpits, said business is nothing short of amazing. I think this guidance was UPOD at its best and nothing more. Yep, Jim McNerney is under-promising and he will now over-deliver, so it is a buy.

20 & 21. Oh my, how little growth ExxonMobil (XOM) and Chevron (CVX) are giving us. I don't want to say they are pathetic, but I do want to say that they are better than this. Both companies have fabulous long-term plans. Both companies are terrific finders of oil. But they are simply giant, lumbering income vehicles and, frankly, if I want income I would rather get it from ConocoPhillips (COP), which has more natural gas upside. With so many high-quality independents like Noble (NBL), EOG (EOG), Pioneer (PXD), Anadarko (APC) and even Occidental (OXY) so low, there's no need to settle for these C students.

The Lone D

18. This leaves us with IBM (IBM). This was just a nasty, no-growth quarter with only one thing going for it: I didn't hear anything about Warren Buffett bolting, even as I think he should. The company's doing some restructuring and I think that it has plenty of buyback in it. But even at $176, down from $192 before the quarter and $215 from a year ago, this one's not a keeper. A D headed to an E, not a B.

We only have preliminary numbers from Wal-Mart (WMT), but they confirm that the company's had a rough go of it. Looking like another C.

Microsoft (MSFT) has new CEO coming. I like him, but he's got to shake the whole company up, top  to bottom, including a new board, so let's not go crazy about him.

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
Large-cap, high-quality McKesson (MCK) is too cheap now, at $147.51 or so. The stock hit $243.60 more than 2.5...



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