4 Winners As the Dow Gets Pummeled
The Dow Jones Industrials (INDEX: ^DJI) fell again today, closing down 125 points, or about 1%, on an increasingly bleak outlook in Europe. If May trading was a boxing match, the equity markets left Round 10 wobbling back to their corner. That's not to say the Dow didn't get in a couple of good punches, though. In fact, the Dow landed a nice jab from Merck (NYS: MRK) and a solid cross from Cisco (NAS: CSCO) today. Unfortunately, 27 of the 30 Dow components couldn't handle the barrage of uppercuts coming out of Greece.
Even though the only "winning" going on today had more in line with Charlie Sheen than the 1996 Chicago Bulls, let's go through some of the top performances.
Networking company Cisco overcame today's broad-based weakness to post a 1.27% gain on the day, leading all Dow components. While the relative outperformance was a likely reversion to the mean following a sharp sell-off last week, it's an encouraging sign that shares have perhaps found near-term support at current levels. Joining Cisco in positive territory today was pharmaceutical giant Merck, rising 0.45%. With Treasuries trading at record low yields, Merck's hefty 4.4% dividend yield and health-care exposure provided a relatively defensive safe haven for investors looking for limited risk and yield.
Away from the Dow, shares of Groupon (NAS: GRPN) soared 18.5% in anticipation of their first-quarter earnings announcement after the market closed. The results were encouraging, with revenue surging 89% versus analyst expectations of 79% growth and earnings per share of $0.02 coming in line with the consensus outlook. Better yet, revenue guidance for second quarter of $550 million to $590 million came in 5% above current estimates on the high end of the range. Will this news shed the daily-deals juggernaut of its "dog" status? Investors appear to think so, with shares up an additional mid-teens percentage in after-hours trading. At that rate, shares will begin tomorrow's trading more than 35% above Friday's closing price.
Also performing well today on encouraging news was a company best known for its share of negative headlines lately. Chesapeake Energy (NYS: CHK) shares rose 4.8% on the day as investors took comfort that former large shareholder, notorious bargain hunter, and, perhaps most importantly, activist investor Carl Icahn has taken another large stake in the natural gas producer. Shareholders needed the reprieve, too, as shares took a nasty 14% hit Friday following liquidity concerns, which have since been addressed by a $3 billion loan from Goldman Sachs and Jefferies.
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At the time this article was published Brenton Flynn owns shares of Chesapeake Energy. The Motley Fool owns shares of Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Chesapeake Energy and Goldman Sachs Group. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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