The Dow Stocks You Should Watch This Week


Earnings season is hitting its peak as hundreds of companies will issue their quarterly reports this week. Among the members of the Dow Jones Industrials , just one short of a dozen companies will be among those issuing fourth-quarter results beginning tomorrow. Let's take a quick look at expectations for all 11 of these Dow components and then drill down on four particularly interesting companies whose earnings could move the markets this week.

Dow earnings
Here's a quick summary of the Dow companies slated to report over the next four days:


Expected to Report

Expected Earnings Per Share

Year-Ago Earnings Per Share

















Johnson & Johnson








United Technologies
















Procter & Gamble




Source: Yahoo! Finance.

This cross-section shows the tug of war going on in the economy recently, with five companies expected to see earnings grow, four seen with lower earnings, and two staying flat. That's consistent with the overall trend toward weaker earnings growth in recent quarters, as the nearly four-year-old bull market starts to look tired and as extremely high corporate profit margins appear to have less room for further expansion.

The 4 reports to read closely this week
It's smart to pay attention whenever any Dow component reports earnings, as the latest news from the leaders of the U.S. economy always contains insight you can apply not just to those stocks but to their competitors as well. But I see four companies in particular as being worth taking a closer look at in the coming week.

DuPont is struggling to recover from an unexpectedly weak third quarter in which revenue fell 9%, sharply lower than what analysts had expected. Specifically, the company's electronics and communications segment saw the biggest drop of 28%, as its sales of photovoltaic materials suffered from a weak solar market. Performance chemicals saw a contraction in revenue of nearly 20%. However, optimism about the solar energy industry and a continuing emphasis toward the more successful agricultural segment could lead to a turnaround for DuPont. Whether the company can beat reduced earnings guidance depends on its ability to quickly maneuver to take advantage of those changing conditions.

For United Technologies , the trend over the past quarter has been to sell off non-core businesses to focus on its aerospace and commercial businesses, especially after having completed its massive acquisition of Goodrich. By doing so, United Tech has positioned itself to profit from surging aircraft demand, and although looking back at the past quarter won't fully reveal the extent of this opportunity, future guidance should help investors understand just how important the company's transition will be to the stock's potential.

Unlike DuPont and United Tech, 3M has analysts expecting modest growth in earnings per share in its coming report. Yet longer-term concerns about where growth will come from in the future have held the stock back in recent months. The focus for investors should be less on whether 3M delivers expected earnings results but rather on its discussion of its recent Ceradyne acquisition and where the company sees itself innovating.

Finally, analysts expect an extra penny per share from Procter & Gamble . But more important will be to see how P&G responds to criticism from investors like Bill Ackman that the company has made too many mistakes in execution lately. With so much success, P&G has been able to coast on its numerous billion-dollar brands, but competitors have started gaining traction.

Enjoy earnings season!
Earnings season is a great time to catch up on how your favorite stocks are performing as companies. By focusing on business fundamentals rather than share-price fluctuations, it's a good time to remind yourself why you bought those stocks in the first place.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends 3M, Johnson & Johnson, McDonald's, and Procter & Gamble and owns shares of IBM, Johnson & Johnson, McDonald's, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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