• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Real Money Post Industrial Average Feels January Chill

The RMPIA easily outpaced the main indexes for 2020, but slipped 1.7% last month.
By CHRIS VERSACE
Feb 01, 2021 | 03:00 PM EST
Stocks quotes in this article: WBA, BIIB, GILD, AAPL, AMZN, GOOGL, FB, MA, QCOM, SBUX, NFLX, KHC, CRM

We've closed the books on the first month of 2021. Equities started off on solid footing, but for the most part they ended the month very differently. This was evidenced by the mixed performance of the major U.S. stock market barometers for the month. Small cap stocks finished January in the pole position, as the Russell 2000 moved 5% higher for January. The S&P 500, however, shed 1.1% and the Dow Jones industrial average fell 2%.

Easily outpacing those market indexes in 2020, the Real Money Post Industrial Average (RMPIA) had gained 34.7% over the year. But it finished down 1.7% in January.

Digging into RMPIA's January performance we find 12 of its constituents outperformed the major market indexes, led by the 26% jump in the shares of Walgreens Boots Alliance (WBA) . Close behind was the 15.4% climb in Biogen (BIIB) shares with the 12.6% move higher in Gilead Sciences (GILD) , rounding out the top three performers for the month. While those three constituents had meaningful share price performance during the month, collectively they account for just 4.2% of RMPIA's overall composition.

By comparison, shares of Apple (AAPL) , Amazon (AMZN) , Alphabet (GOOGL) , Facebook (FB) , and Mastercard (MA) collectively comprise 42.5% of RMPIA. In other words, those five stocks along with the sixth largest holding -- Qualcomm (QCOM)  -- were responsible for the majority of the January move in RMPIA. While shares of Alphabet rose 4.3% in January, that was more than offset by the 11.4% decline in Mastercard shares and the smaller declines posted by Apple, Facebook, and Amazon shares. 

As we enter February, the next few weeks will see roughly 60% of the S&P 500 report December-quarter results and, in some cases, offer their outlook for the coming quarter or the coming year. Current consensus estimates put 2021 EPS for the S&P 500 at $172.05, up 24.3% vs. 2020 and 5.8% compared to 2019. Prospects for EPS growth in the coming year at RMPIA are considerably quicker -- tallying the consensus estimates for the RMPIA constituents points to aggregate EPS growth of 27% in 2021 vs. 2020 and 10.1% vs. 2019. Roughly two-thirds of the constituents are slated to deliver double-digit EPS growth over the coming year led by Starbucks (SBUX) , Netflix (NFLX)  and Qualcomm. Only some constituents are currently forecast to see their EPS contract year-over-year -- Gilead, Kraft Heinz (KHC) , Salesforce (CRM)  and Biogen.

Over the next few weeks, as more than 2,000 companies report quarterly results, we'll be monitoring consensus EPS revisions for RMPIA. Given prospects for the global economy to improve in the second half of the year as vaccination levels improve, plus the tailwinds associated with 5G, digital shopping, contact-free payments, video streaming and working-and-learning-from-home trends, we strongly suspect RMPIA's EPS prospects will continue outperform the S&P 500. And I'd remind fellow investors that historically faster earnings growth tends to drive multiple expansion greater than that being accorded to the S&P 500. The combination of those two prospects should translate into RMPIA once again outperforming in the months to come.

(CRM, SBUX, MA, FB, GOOGL, AMZN,and AAPL are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells these stocks? Learn more now.)

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Versace had no position in any security mentioned.

TAGS: Investing | Investing basics | Stocks | Real Money

More from Stocks

Hopeful Investors Get Scraped by the Bear

James "Rev Shark" DePorre
Jun 28, 2022 4:24 PM EDT

Bulls hoped that a bottom had been found, but they overlooked the reasons behind the rally last week.

Bed Bath & Beyond's Weakness is Likely to Persist

Bruce Kamich
Jun 28, 2022 2:36 PM EDT

The shares have been in the single digits since early May.

Let's Look Under the 'Shell' of This ESG-Style Fund

Mark Abssy
Jun 28, 2022 2:00 PM EDT

One of the Nuveen Global Net-Zero Transition exchange-traded fund's largest holdings is Shell, so let's drill down on this supposedly environmentally friendly ETF.

Taking Another Look at ON Semiconductor's Charts

Bruce Kamich
Jun 28, 2022 1:43 PM EDT

Here's what to watch for.

Feeling Queasy Over Moderna's Outlook? Investors May Still Get Their Shot

Brad Ginesin
Jun 28, 2022 12:45 PM EDT

With an expected dip for 2023, the pharmaceutical company could see its mRNA technology win big over the long term -- and investors could be rewarded.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • 12:10 AM EDT PAUL PRICE

    More Insider Buying in American Woodmark (AMWD)

    American Woodmark , which I've discussed here fr...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login