The year is halfway over and some Dow Jones stocks are faring better than others as the U.S. tries to emerge from the Covid-19 pandemic. But Verizon Communications (VZ) and Disney (DIS) are among weaker blue-chip names.
Wednesday is the last day of the second quarter and the final day of the first half of 2021. On the year so far, the S&P 500 is up 14%, while the Nasdaq composite and the Dow Jones Industrial Average are up 12% each.
The Dow’s Biggest Loser
Verizon shares rose 0.1% to 55.92 on the stock market today. VZ stock has consistently underperformed the S&P 500 in the past year. It is currently down 4.8% year to date, making it the Dow’s biggest loser.
Verizon has invested heavily in 5G wireless technology. But competition is expected to intensify after T-Mobile US (TMUS) bought Sprint, and AT&T (T) announced its spinning off its WarnerMedia business to focus more investments on 5G technology. Analysts also see Verizon falling behind T-Mobile and AT&T in signing up new postpaid wireless subscribers.
VZ stock is consolidating in a flat base with a 62.05 entry point. But investors should be cautious as the stock has weak fundamentals. Verizon has a poor IBD Composite Rating of 27 out of 99, according to the IBD Stock Checkup tool. The Composite Rating compiles scores on key fundamental and technical metrics: earnings and sales growth, profit margins, return on equity, and relative price performance. It has a 61 EPS Rating.
Verizon earnings are expected to be flat in 2021 and up 1% in 2022.
The relative strength line for Verizon stock has been falling for years, reflecting its poor performance vs. the S&P 500 index.
Disney shares rose 0.6% to 174.92 Wednesday. But DIS stock is down 3.4% since the start of the year.
Disney’s theme parks were hit hard by the Covid-19 pandemic. Its U.S.-based parks were closed on and off for the last 15 months as case rates fluctuated. Cruise ships were docked, but are now ready to head out to sea again.
However, DIS stock peaked in March and has been hitting resistance around a declining 50-day line for months. Concern about the Delta variant of the coronavirus has hit travel and vacation stocks recently as well.
While Disney fans couldn’t visit the “Happiest Place on Earth” or see a Disney movie in theaters, they could watch movies and shows on the Disney+ streaming service.
Still, streaming wasn’t enough for the entertainment behemoth. Disney reported mixed fiscal Q2 results, with earnings per share of 79 cents on revenue of $15.61 billion as subscriber rates fell short of some analyst estimates.
Disney has a very weak Composite Rating of 27 and a poor EPS Rating of 33.
Procter & Gamble Stock
Procter & Gamble stock edged up 0.1% to 134.55 Wednesday. Still, PG stock is down 3.3% since the start of the year.
P&G brands include Tide laundry detergent and Charmin toilet paper, both hot products during the pandemic. But that panic buying is long past. Meanwhile, inflation worries currently loom over the consumer products industry.
In April, the consumer products company announced price hikes for September, saying that both materials and transportation were becoming more expensive. Its baby products, adult diapers and feminine-care products are expected to see the largest price increases.
P&G has a 59 Composite Rating and a 75 EPS Rating. Its RS line has been on the downturn since last October.
Walmart stock climbed 2.9% Wednesday to 141.30. But despite the recent gains, WMT stock is off 1.9% on the year.
Walmart’s RS line has been trending lower since October, recently hitting its worst levels since late 2018. The big-box retailer also has a weak Composite Rating of 42.
Walmart was considered an essential business during the pandemic as shoppers flocked to the store to buy soap and toilet paper. But Covid-19 helped further accelerate online shopping and heightened Walmart’s competition with Amazon.com (AMZN).
Analysts warn that Walmart’s same-store growth is unsustainable and its increased minimum wage will hit margins in the short term.
Coca-Cola stock was flat at 53.85 Wednesday, but down 1.8% on the year. KO stock gave up gains from a cup-with-handle base, sending it below the 54.04 entry point.
Coke’s RS line tumbled in January and has been trending lower since. The RS line has been trending lower for years.
The beverage giant did report Q1 earnings and revenue that topped Wall Street targets. But the stock has a mediocre 56 Composite Rating and a 60 EPS Rating.
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