These Stocks Will Move the Dow Tomorrow
You know you're in the heart of earnings season when some of the biggest names in the stock market start reporting their quarterly results. Tomorrow, five members of the Dow Jones Industrials (INDEX: ^DJI) will put their investors to the test by announcing how they finished out 2011. What they say could mean a big breakout for the Dow to the upside -- or reverse what has so far been an amazing start to 2012.
Let's take a closer look at the companies that are issuing earnings reports tomorrow.
McDonald's (NYS: MCD)
The company behind the Golden Arches has a streak going, and it's looking to extend that streak tomorrow. For 22 straight quarters, the company has grown its earnings per share, and analysts expect No. 23 tomorrow morning when McDonald's reports before the bell, with estimates of $1.29 per share expected to top last year's $1.16 figure.
Perhaps the most exciting thing about McDonald's right now is its China opportunity. The company plans to open a new store in China on a daily basis inside the next four years, and with Asia-Pacific profits having more than tripled in the past five years, there's big money to be made there. Watch out for what the company says tomorrow about its international expansion plans.
Johnson & Johnson (NYS: JNJ)
J&J can't claim the same track record as McDonald's, but if things go well tomorrow -- and analysts expect that they will -- the health-care conglomerate will post its 10th straight year-over-year gain in quarterly earnings per share.
But the company has had its share of bad news. After a year of recalls and other lousy news, J&J announced last week that the company lost a lawsuit over stent patents to competitors Abbott Labs and Medtronic. Nevertheless, Fool analyst Anand Chokkavelu believes that in the long run, nothing can stop J&J from dominating health care -- and at a very reasonable valuation, now's the time to consider picking up the shares.
DuPont (NYS: DD)
The chemicals giant has seen a lot more volatility in its earnings over the past several years, and the company is currently in a retrenching mode. Analysts see DuPont reporting earnings of $0.33 per share tomorrow morning, compared to a $0.50-per-share gain in 2010's fourth quarter.
DuPont has seen huge gains from its investments in titanium dioxide, a pigment product used in paint manufacturing. But the company's buyout of food ingredients company Danisco early last year boosted its agriculture and nutritional segments, proving that DuPont is well-diversified. Even if earnings contract from year-ago levels, things still look good for the chemical company.
Verizon (NYS: VZ)
Verizon's earnings have been amazingly stable lately, and tomorrow isn't expected to see the company buck the trend. Quarterly EPS has been between $0.50 and $0.70 since 2005, and analyst estimates of $0.53 per share should stay solidly within that range.
What may be most interesting about Verizon right now are its co-marketing agreements with a range of cable companies. Once seen as fierce competitors, telecoms and cable operators are getting together to offer bundles of broadband, video, and voice services. They probably won't have an effect on the earnings release, but going forward, the impact could be huge.
Last year was a horrible one for insurance companies, but Travelers is expected to continue its rebound from the worst of 2011's disasters. After suffering a loss in the second quarter, Travelers should get back to close to its pre-disaster levels, with analysts expecting $1.52 per share in earnings.
Often, bad years help support pricing for insurance companies, weeding out weaker insurance companies and taking away competition. That won't show up in Travelers' numbers tomorrow, but it could help boost the company's prospects in 2012 and beyond.
Keep your eyes open
Earnings are important, and when Dow stocks announce surprising results, they can move the market. Make sure to tune in tomorrow to find out what happened to these stocks.
Earnings announcements can move a stock for a day or two, but over longer periods, solid, consistent growth makes all the difference. Find out the best stocks for long run in The Motley Fool's latest special report, where we reveal the names of three stocks poised to produce long-term wealth for investors. It's free but only available for a limited time, so click here and read it today.
At the time this article was published Fool contributor Dan Caplinger is always moving. You can follow him on Twitter here. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson and McDonald's, as well as creating a diagonal call position in Johnson & Johnson. 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 Fool's disclosure policy tells it like it is.
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