Earning session Q3 . .

The S&P 500 Index is notching new all-time highs on a nominal basis and — as of this writing — the Dow Jones Industrial Average isn’t far behind, led by a motley group of defensive names that will continue to prosper in the third quarter.  As impressive as a new record on the S&P 500 might sound, the benchmark index is still up only 4.5% for the year-to-date.  


Let’s take a look of those trading vehicles . . 


International Business Machines  (IBM)


Price – 155.33 $ 

Change     –       +0.87 (0.56%)

Market cap –  150.93B  

P/E – 11.70                        

 EPS –  13.28

International Business Machines Corp. (NYSE:IBM) is having a very strong year so far and continues to build a head of steam. As with some other old-line tech companies, the market is starting to believe in its transformation to a cloud-based services provider. 

Earnings per share is expected to start growing again in fiscal 2017, and the stock is rising ahead of that promise. With a year-to-date gain of 13% and a dividend yield of 3.63%, IBM is suddenly a total return machine.


Caterpilar (CAT)


Price –  77.80$

Change     –     +0.43 (0.56%

Market cap –  46.83B

EPS –  2.09

 P/E – 37.17


Prices for crude oil and other commodities have either stabilized or reversed trend, and that’s the single biggest headwind for CAT stock. At the same time, although key sales metrics continue to decline, the rate at which they’re doing so is decelerating. CAT has been down so hard for so long that “less bad” is very good. Cost cuts are also going well, helping shares rise 15% so far this year.


Chevron (CVX)



Price   – 105.39$

Change –       +0.62 (0.59%)

Market cap –   201.94B

P/E  –  152.78

EPS –  0.69

CVX is up 18% for the year-to-date on the recovery in prices for crude oil, which are expected to continue to rise through year-end and beyond. As a result, Wall Street expects a big leap in earnings per share next year. Analysts expect full-year 2017 EPS to grow to $4.74 from the $1.20 expected this year.


Exxon Mobile Corp  (XOM)


Price –      93.89$

Change   +0.35 (0.37%)

Market Cap – 391.75B

EPS   –  3.11

P/E    –  30.21

The bull case for Exxon Mobil Corporation(NYSE:XOM) is pretty much the same one for Chevron. Energy prices are slowly but surely recovering. And, like CVX, parts of the highly diversified oil major actually benefit when oil prices are lower. Indeed, in the most recent quarter, fatter margins in the chemicals segment propelled XOM to Street-crushing profits. That’s a big part of why the stock has gained 21% so far this year.



Verizon Communications (VZ)



Price               –            55.93$

Change          –           +0.03 (0.05%)

Market Cap   –           230.13B

 EPS                  –       4.40

 P/E                    –   12.71

Defensive sector, low volatility and a fat dividend yield?  That helps explain why a generally poky telecommunications stock is one of the best performing Dow Jones stock this year with a gain of 20%. And that’s not all: A dividend yield of 4.04% is juicing total returns. VZ has some fundamental tailwinds heading into the quarter. It has pricing power, a credible mobile advertising strategy and is overflowing with cash. 


Johnson & Johnson (JNJ)


Price             – 122.93$

Change      –    +0.08 (0.07%)

Market Cap    – 339.08B

EPS                   –     5.49

P/E                   –     22.41

Sure, as a healthcare company, JNJ benefits from gains in the broader sector and well long-term demographic trends. But the attraction rightfully comes down to its solid profit growth in the midst of an earnings recession … and a lack of alternatives. Bonds are so ugly that investors are forced to embrace more defensive equities. Medical devices, pharmaceuticals and consumer staples are better equipped to withstand global sluggishness and any impact from the Brexit. With such a widely diversified portfolio, JNJ offers more protection than many sector names.   Year-to-Date Performance: 20%


At the moment of writing  J. Mason did not hold any of the above securities. 



J. Mason ♦