Dow Approaches 13,000, But Worries Remain
Edgar is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
With DOW reaching 13,000, investors are becoming jittery and asking themselves whether the psychological figure really mean anything? Greece finally got its deal approved, the entire world is drowning in debt, and we're oiling our printing press every morning. But if the market is chugging along, then hedge funds are buying and accumulating value names since ultimately they can't fight the trend. Besides Walmart's (NYSE: WMT) revenue miss that plummeted the stock 4% dragging down DOW, few names particularly are pushing the major index higher today.
Home Depot (NYSE: HD)has surprised investors with a phenomenal quarter, reporting earnings of $0.50 instead of the $0.42 analyst consensus.
This 32% increase and 5.9% sales growth raises questions about housing and whether the profitability is highly correlated to a housing bottom. Home Depot's rise reflects a handful of new retail store additions, which includes international store openings with a 2% increase in same-store sales. With the stock piercing its 52-week high of $48.07, the question that lingers on investors minds remains in the slow recovery of the housing market as well as the tight consumer credit that can adversely affect near-term sales. I'm bullish on the stock since I believe 2012 will mark the housing bottom in most regions with slight price increases in 2013 and 2014.
Exxon Mobil (NYSE: XOM) is also approaching its 52 week high of $88.23 with the recent crude rally. Company has enjoyed phenomenal earnings and dividend growth sustainability. It should continue to benefit from upstream growth opportunities in the deep water, LNG, onshore and ventures with state owned companies. Exxon's advanced technology allows the company to have its projects developed in a timely and cost efficient manner. The start up of 11 major global projects through 2013 should add 600,000 barrels of oil a day and should allow the company to surpass production growth targets of 4 to 5% a year. Company also expects $5 billion per quarter in stock repurchases and capital expenditures of $33 billion-$37 billion through 2015. In my opinion Exxon should surpass its 52 week high by next month.
Motley Fool newsletter services recommend The Home Depot and Wal-Mart Stores. The Motley Fool owns shares of Wal-Mart Stores. edgarambart30 has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.