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5 Big-Name Blue Chips to Dump ASAP

Yes, you should consider a defensive stance, but not every blue chip is the perfect avenue for safety right now

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Caterpillar

CAT 5 Big Name Blue Chips to Dump ASAPCaterpillar (CAT) is a dominant industrial stock with big name recognition and a nice 2.9% dividend yield. And very recently it won the title of “best Dow stock of the year,” tacking on an impressive gain of 56% in 2010 vs. about 11% gains for the broader industrial average.

But those were happier times, and CAT stock is right back where it was about three years ago and is off about 25% from its 2011 peak — including a roughly 4% decline year-to-date in 2013 vs a significant rally for the rest of the stock market.

Recent softness has been thanks to three straight earnings misses in a row. In January it was a big writedown thanks to fraud at a Chinese company it acquired, in April it was an earnings miss and disappointing guidance and then just a few weeks ago in July it was an ugly 43% slump in profits.

But it’s also the bigger end to a commodities boom we saw a few years ago. Global mining growth that was taking place in spite of the financial crisis has now faded, and the impressive results off the bear-market lows have been met with nothing but disappointment in recent years.

And thanks to slowing commodity demand in China, that mining outlook isn’t going to change anytime soon.


Article printed from InvestorPlace Media, http://investorplace.com/2013/08/5-big-name-blue-chip-stocks-to-sell/.

©2014 InvestorPlace Media, LLC

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