The first half of the year is officially over and in the record books. All three major U.S. indexes are in positive territory, but the Dow Jones Industrial Average is clearly lagging behind the S&P 500 and Nasdaq. However, the Dow broke above 17,000 on Friday for the first time in history, and there are at least five blue chips that are outperforming.
During the first six months of the year, the Dow gained a very modest 1.5 percent. In comparison, the S&P 500 and Nasdaq jumped 6.1 percent and 5.5 percent, respectively. The S&P 500 has managed to climb higher for six consecutive quarters, representing the longest streak of gains for the index since 1998. The gap performance between the Dow and the S&P 500 during the first half of the year was one of the biggest on record.
“Going back to 1929, there have only been five other years where the DJIA performed worse relative to the S&P 500,” explains Bespoke Investment Group. “The widest margin of outperformance was in 2000, when the DJIA was down over 9 percent in the first half of the year while the S&P 500 was down just 1.0 percent. The most recent period where the S&P 500 outperformed the DJIA by a wider margin was in 2009, so there’s something for both bears (2000) and the bulls (2009) in terms of similar periods.”
Despite the outperformance of the S&P 500, let’s take a look at five Dow members outperforming all three major indexes in 2014.
5. Disney (NYSE:DIS)
Shares of Disney increased 12.2 percent through the first six months of 2014. Founded in 1923, Disney is a leading family entertainment and media enterprise with five business segments: media networks, parks and resorts, studio entertainment, consumer products, and interactive media.
Disney has enjoyed unprecedented success recently. The global hit Frozen is the world’s highest grossing animated film of all time, and the best-selling title ever released on Blu-ray. The soundtrack for the movie also became the number one album in the United States. The pipeline is also strong for Disney as new Star Wars films will be released in the coming years, including spinoffs.
4. Johnson & Johnson (NYSE:JNJ)
Johnson & Johnson gained 14.2 percent through the first half of the year. Stocks across the board in the healthcare sector continue to receive positive momentum as the nation’s baby boomer generation enters their prime medical-spending years. Furthermore, Johnson & Johnson has been around for nearly 130 years, but the company is still innovating through new products.
In April, Johnson & Johnson announced sales of $18.1 billion for the first quarter, up 3.5 percent from the same period a year earlier. Domestic sales increased 2.2 percent, while international sales gained 4.5 percent.
“Johnson & Johnson delivered strong first-quarter results driven by successful new product launches and the continued growth of key products,” said Alex Gorsky, Chairman and Chief Executive Officer, in a press release. “Our talented colleagues around the world continue to bring meaningful innovations to patients and customers, addressing significant unmet needs. We also advanced our near-term priorities and long-term growth drivers, positioning us well to deliver sustainable results.”
3. Merck (NYSE:MRK)
Shares of Merck only edged 1.9 percent higher in the second quarter, but have jumped 15.6 percent through the first six months. Founded in 1891, Merck is a global healthcare leader and a pharmaceutical giant. Through prescription medicines, vaccines, biologic therapies, and consumer care and animal health products, Merck works with customers and operate in more than 140 countries to deliver innovative health solutions.
Last month, Merck announced results from a global, investigational Phase 3 study to evaluate the safety and efficacy of EMEND (aprepitant) in the prevention of chemotherapy-induced nausea and vomiting (CINV) in pediatric cancer patients, aged 6 months to 17 years. The use of the EMEND regimen for CINV prevention was significantly more effective than a control regimen in achieving Complete Response, defined as no vomiting or retching and no use of rescue medication for nausea and vomiting.
2. Intel (NASDAQ:INTC)
Shares of Intel jumped 19.7 percent in the second quarter to bring its first half returns to 19 percent. The forgotten tech giant has been making a comeback in recent years as it address mobile computing. In the first quarter, Intel shipped 5 million tablet processors, and has a goal of shipping 40 million tablets for 2014. In fact, 130 new Intel-based Android and Windows tablets are debuting in the market this year. Revenue is also stabilizing for the PC Client Group, which was down just 1 percent on a year-over-year basis in the first quarter.
Last month, Intel raised its second-quarter and full-year revenue and gross margin expectations. As a result of stronger than expected demand for business PCs, Intel now expects second-quarter revenue to be $13.7 billion, plus or minus $300 million, as compared to the previous range of $13.0 billion, plus or minus $500 million. The company is forecasting the mid-point of the gross margin range to increase by one point to 64 percent, primarily the result of higher PC unit volume.
1. Caterpillar (NYSE:CAT)
Shares of Caterpillar surged 19.7 percent through the first six months of the year. The move surprised many investors as the global economy remains weak and Caterpillar has received negative press from the likes of famous short-seller Jim Chanos.
In April, Caterpillar reported higher first-quarter profit per share and raised its 2014 profit outlook. The company earned $1.44 per share, up from $1.31 per share a year earlier. Sales were about flat at $13.24 billion.
“Given the business and economic uncertainties around the world and continuing decline in our mining sales, I am pleased with our performance in the first quarter. We understand we don’t control the economy and have instead focused on what we can improve. We’re lowering costs, improving cash flow and driving value for our customers through the continued deployment of our lean manufacturing initiatives. We see the benefits of these actions in our first-quarter results and in improving market position for many of our products,” said Caterpillar CEO Doug Oberhelman. “This was a quarter that clearly highlighted the diversity of Caterpillar’s business across industries and regions of the world, and how that diversity continues to help us through the downturn in mining.”
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