• 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 Outperforms for the Quarter

RMPIA for the September-ending quarter is up .2%, outperforming most of the major market indexes. Let's dig in.
By CHRIS VERSACE
Oct 05, 2021 | 12:00 PM EDT
Stocks quotes in this article: ACN, COST, CRM, GOOGL, NFLX, PYPL, WBA, KHC, BIIB, NKE, FDX, BBBY

As Real Money readers know, we've developed our own benchmark, the Real Money Post Industrial Average (RMPIA) and for the September quarter it's .2% move higher outperformed the majority of major market indexes.

How does that stack up? Last week, as we closed the books on the quarter in full, the major indexes didn't fare too badly:

  • S&P 500: +0.23%
  • Nasdaq Composite Index: -0.4%
  • Dow Jones industrial average: - 1.9%
  • Russell 2000: -4.6%

But those figures also gloss over the damage in September:

  • S&P 500: -4.8%
  • Nasdaq Composite Index: -5.3%
  • Nasdaq 100: -5.7%
  • Dow Jones: - 4.3%
  • Russell 2000: -3.1%

For the quarter, roughly a dozen of RMPIA's constituents moved higher, led by the likes of Accenture (ACN) , Costco Wholesale (COST) , Salesforce (CRM) , Alphabet (GOOGL) , and Netflix (NFLX) . Those gains, however, were offset by the share price declines that occurred during the quarter by the likes of PayPal  (PYPL) , Walgreen Boots Alliance (WBA) , Kraft Heinz (KHC) , and Biogen (BIIB) .

The issues that weighed on the major market indexes during the quarter were several, including supply chain issues, rising input costs, difficulty finding employees, continued pushouts on both the debt ceiling and infrastructure spending, timing for Fed bond tapering, weaker-than-expected economic data, the continued chip shortage and -- more recently -- manufacturing blackouts in China. And lest one thinks I forgot something, we also saw renewed restrictions put in place to varying degrees across the globe due to the delta variant. I would say the fair observation is the vaccination led re-opening didn't go as smoothly as plan, but that would be something of an understatement.

Recent company commentaries from the likes of Nike (NKE) , FedEx (FDX) , Bed Bath & Beyond (BBBY) , and others confirm the notion the September-quarter earnings season is likely to be something of a bumpy one. At risk are earnings expectations for not only the September quarter, but also for the December one, as well. Currently, EPS for the S&P 500 in the second half of 2021 is expected to reach $99.92, up more than 22% year-over-year, but down about 2% compared to the first half of 2021. Based on what those three companies shared just last week, odds are we will see that $99.92 in EPS get revised lower in the coming weeks as the September quarter earnings season takes hold.

Turning back to RMPIA, despite some modest EPS revisions for the basket of companies that make it up, it is still poised to deliver substantially faster EPS growth over the 2019-2023 time frame, -- around 73.4% in aggregate vs. 44.1% for the S&P 500. For those looking for a compound annual growth equivalent, RMPIA stacks up at more than 36%, while the S&P 500 clocks in at 17%. If there are EPS revisions for the second half of the year, odds are they would do more damage to the S&P 500 than RMPIA, but we'll be on watch to size up revisions for both. The concept to focus on is that EPS growth faster than the S&P 500 deserves a premium valuation. Based on its Sept. 30 close, RMPIA traded at a price/earnings to growth (PEG) ratio of 0.4-times based on the above EPS growth and its current P/E multiple of 30.5-times for 2021. Based on similar metrics, the PEG ratio for the S&P 500 was 0.49.

Perhaps some repricing is in order ...

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 | Stocks | Real Money

More from Stocks

Fear Fades as a Reason to Rally

James "Rev Shark" DePorre
May 16, 2022 4:20 PM EDT

Monday turns uninspiring as traders lack incentive to buy and oil moves higher amid poor economic data.

Occidental Petroleum Continues to Target Higher Prices

Bruce Kamich
May 16, 2022 2:52 PM EDT

Here's our first price target and our long term objective.

Supply and Demand Are Critical, but Remember: Timing Is Still Everything

Maleeha Bengali
May 16, 2022 1:51 PM EDT

Econ 101 suggests that at some point, either the supply side catches up, or demand falls to get prices back in equilibrium. Let's see what this means for oil -- and a potential recession.

How Is JetBlue's Stock Affected by Its Hostile Bid for Spirit?

Bruce Kamich
May 16, 2022 1:08 PM EDT

Let's review the charts and indicators.

Da or Nyet on McDonald's as It Exits Russia?

Bruce Kamich
May 16, 2022 12:15 PM EDT

Let's check out the charts to see the best course of action for investors.

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

  • 07:14 PM EDT PAUL PRICE

    A New, Very Scary Movie

  • 08:51 AM EDT PAUL PRICE

    Advice From the Future...

  • 12:20 PM EDT PAUL PRICE

    A Blast From the Past Regarding Bitcoin

  • 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