Dow Jones Stocks Boeing (BA), UnitedHealth (UNH), Caterpillar (CAT), rafters (CVX) and Goldman Sachs (GS) are the focus this week.
X
The Dow Jones Industrial Average has led the current market rally and recently hit a seven-month high. Although made up of just 30 stocks, the Dow Jones Index reflects broader strength across industrial, financial, medical and energy stocks.
All five of these Dow stocks are near buy points, some of which are potentially actionable.
The overall market uptrend made progress over the past week, with the S&P 500 regaining its 200-day moving average and holding that key level on Friday despite a hot jobs report.
Chevron stock is on the IBD Leaderboard. Boeing shares are on SwingTrader.
Dow Jones Stocks: Boeing
BA shares are up 4% on Friday to 182.87, slightly off a buy point based on 173.95 cups. Investors could use the recent short-term highs as alternative entries. For the week, Boeing shares rose 2.5%.
Boeing stock rallied higher on Friday after the Wall Street Journal reported United Airlines (UAL) is about to purchase “dozens” of 787 Dreamliners.
After a huge run up, Boeing stock had paused for the past few weeks, allowing the 21-day moving average to close the gap.
Boeing stock started its recovery in late September. This was briefly interrupted with a final reversal on Oct. 26 when Boeing posted a surprise third-quarter loss, with defense segment challenges offsetting commercial aviation gains.
But in early November, Boeing said it expects to deliver about 375 of its best-selling 737 jet in 2022, rising to 400 to 450 next year. By 2025-26, Boeing forecasts about 800 commercial deliveries, including the 737 and 787 Dreamliner. In October, Boeing said it had delivered 277 units of the 737 jet and nine units of the 787, the company said in early October.
All of those future jet sales will contribute to much stronger cash flow for years to come, Boeing said.
Boeing’s best-selling 737 Max returned to service in December 2020 after two deadly flights led to global flight bans. Deliveries of the 787 resumed after production issues last quarter. Aircraft manufacturers receive the bulk of payments from airlines and other customers after the jets are delivered.
Boeing suffered from the collapse in commercial and business air travel during the pandemic. It also faced setbacks on key defense programs. The company is working on an about-face amid recession fears mounting and supply disruptions enduring.
Analysts expect Boeing to earn 32 cents a share in the fourth quarter, up from a loss of 7.69 a share a year ago. Wall Street is forecasting revenue growth of 34% to $19.8 billion.
In 2023, Boeing is expected to report a profit after four years of losses.
The Dow Jones stock Boeing has a composite rating of 47. It has a relative strength rating of 93, an IBD Stock Checkup exclusive gauge of stock price movements. The EPS rating is a low 1.
Caterpillar bearings
CAT shares rose 0.2% on Friday to 236.13, also up 0.2% on the week.
According to MarketSmith analysis, shares are pausing by a still-valid buy point of 238 from a cup base dating back to April. Investors could use 239.95 as another buy point, either as a top for the 7-month cup base or as a traditional point for a major consolidation from June 2021 onwards.
Dow Jones stock CAT has rallied 46% since its late September bottom. The six-week run — including an 8% gain on third-quarter blowout results — has taken a breather since Nov. 14 while trading in a tight range.
The Deerfield, Illinois-based construction and mining equipment giant easily topped earnings estimates on Oct. 27. The company reported that earnings per share rose 48% to $3.95. Revenue rose 20% to $14.9 billion.
The Street is forecasting fourth-quarter earnings per share to rise 48% to $3.97, while revenue is expected to rise 14% to $15.8 billion.
Caterpillar stock was the IBD stock of the day on Thursday. On Wednesday, colleague of the heavy machinery manufacturer Titan machines (TITN) surged 26% after its third-quarter 2023 results beat earnings and revenue forecasts.
Other heavy gear names including deer (DE), Cummins (CMI) and United Rents (URI) are also showing signs of strength in the current market.
With the global economy potentially sliding toward recession in 2023, the timing for a big move in CAT stock seems unusual. Even on a soft landing, home construction, which accounts for 25% of Caterpillar’s construction industry sales, goes into the tank.
The Dow Jones Stock CAT has an IBD Composite Rating of 94. Its Relative Strength Rating is 93 and its EPS Rating is 85.
United Health Stock
UNH shares fell 0.1% to 536.16 on Friday. On the week, shares fell 0.3%. This weekly action included a 3.7% gain on Wednesday, a big volume bounce off the 21-day and 50-day moving averages.
At Friday’s close, UNH stock has a flat basis with a buy point of 558.20, off a previous cup and handle basis.
Investors could buy UnitedHealth shares above Thursday’s high of 553. There is a lot of trading in this area including an earlier buy point of 553.29.
Healthcare stocks, including UnitedHealth, continue to hold up as they tend to be more shielded from inflationary pressures. UNH stock has outperformed the broader market for much of 2022.
UnitedHealth’s business model aims to contain healthcare costs for its managed care division, in part by insourcing healthcare services to its own cost-effective locations. UNH’s health insurance arm, UnitedHealthcare, is the largest health insurance company in the country by membership.
UnitedHealth, based in Minnetonka, Minnesota, is also making solid third-quarter earnings. The managed care giant raised its earnings guidance after beating third-quarter earnings estimates on October 14.
UnitedHealth’s earnings rose 28% to $5.79 per share, its second straight quarter of accelerated growth. Revenue rose nearly 12% to $80.894 billion.
Analysts expect earnings per share to rise 32% to $5.90 in the fourth quarter. According to FactSet, revenue is expected to increase 12% to $82.3 billion.
In terms of valuations, UNH stock ranks second in the medically managed care industry person (BUZZ).
The Dow Jones stock has a composite rating of 93 out of 99. It has a relative strength rating of 85. The stock’s EPS rating is 94.
Dow Jones Stocks: Chevron
CVX shares fell 0.8% on Friday to 181.03, just below the 182.50 buy point and just below the 21-day moving average. For the week, Chevron was down about 1.45%. CVX stock has traded around this official buy point all month.
Crude oil prices had fallen again but rallied last week amid a series of headwinds.
Crude oil futures initially came under pressure as the White House eased oil sanctions on Venezuela. This will allow Chevron to resume oil production in the Latin American nation for at least six months.
But signs that China will ease its Covid policy helped boost crude oil prices. Meanwhile, it’s possible that OPEC+, which includes Russia, will announce an oil production cut when the cartel meets on Sunday.
In late October, Chevron beat earnings guidance for the third quarter. Chevron reported an 88% increase in earnings per share to $5.56. Revenue rose 59% to $66.6 billion in the third quarter.
Wall Street expects fourth-quarter earnings to rise 76% to $4.51 per share. Revenue is expected to increase 18% to $56.6 billion, according to FactSet.
California-based Chevron is ranked ninth in IBD’s Oil & Gas-Integrated industry group. CVX stock has a composite rating of 94 and a relative strength rating of 94. Additionally, it has an EPS rating of 79.
Goldman Sachs stock
GS shares fell 0.8% to 380.58 on Friday. For the week, shares fell 2.1%. The investment bank has a buy point of 389.68 from a 35% deep cup and handle basis dating back to November 2021.
Investors could also view the recent break as a shelf just above the buy range from a bottoming base that Goldman stock broke through in early November.
The 21-day moving average has almost caught up, while the 50-day moving average is gaining ground. The line of relative strength is at a multi-year high, reflecting GS stock’s outperformance versus the S&P 500.
On Oct. 18, Goldman’s third-quarter results beat earnings estimates. The investment bank and financial services company reported that earnings fell to $8.25 per share, down 44%, while revenue fell to $11.98 billion, down 12% in the month corresponds to the course of the year.
Goldman Sachs’ investment banking revenue fell 57% for the year to $1.58 billion as the company saw significant declines in revenue from corporate lending, financial advisory and insurance businesses. But Global Markets revenue rose 11% to $6.2 billion, driven by growth in its Fixed Income, Currency and Commodities (FICC) segment.
FICC revenue increased 44% to $3.53 billion on significant increases in revenue from interest rate products, currencies, commodities and credit products. However, Goldman saw significant declines in mortgage income but saw increases in financing and mortgage loan income.
Analysts are expecting fourth-quarter earnings per share to fall 32% to $7.36, while revenue is expected to fall 10% to $11.3 billion.
Dow Jones stock Goldman Sachs ranks third in the Banks-Money Center industry group. GS has a composite rating of 86. Its relative strength rating is 89 and its EPS rating is 58.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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