Market Wrap-Up for Aug.5 (PG, ED, WTW, CEC, PCLN, CF, more)

By
A A A
Share |

After a big open on a better-than-expected jobs report this morning, sellers quickly came in and took us off those early levels. By the close, the tape did finish mixed as momentum stocks were hammered extremely hard. Heaven help any company that reports a disappointing earnings number right now. We are seeing companies' shares getting taken out to the woodshed, so to speak, on any earnings miss or weak guidance.

Just looking at some examples today, we are seeing the following companies feeling the wrath of disappointing results: Weight Watchers ( WTW ) closed down 17%, CEC Entertainment (Chuck-E-Cheese restaurants) closed down 13%, Mid-America Apartment Communities ( MAA ) was down 5%. On the flipside, Consolidated Edison ( ED ) gained 3% on a good earnings report, while Procter & Gamble ( PG ) climbed over $1 on its earnings numbers. We are still big fans of this utility name. Also, fertilizer play CF Industries ( CF ) was up 3% on blowout earnings numbers. The trend of low-dividend yield, high-beta dividend names blowing up has reared its ugly head this quarter, which is why anyone considering those plays need to treat them as trading ideas more so than long-term income investment targets.

On a quick non-dividend note, shares of online travel agent Priceline ( PCLN ) traded up by 9% following its big earnings beat. Did you realize their market cap (approximately $26 Billion) is larger than the entire U.S. airline industry combined? Fortunately we have stayed far away from any investment ideas in that sector, and we would recommend everyone out there do the same. We could potentially see airline stocks rally if oil prices were to drop significantly, but we think that would be more of a trade for someone, rather than a long-term investing idea.

We continue to fine-tune our industry-leading Best Dividend Stocks List , and this morning we downgraded another stock that we'd like to wait for a better entry point on. Be sure to check out this post from earlier today to see what stock we downgraded .

As investors contemplate perhaps moving to cash or staying in a money market account that pays barely over 0%, let me put out a reminder that you need to avoid thinking of money markets or low interest bank CD's as a place to park money. In the months ahead, and in some cases already, homeowners are being hit with property tax hikes a bit more than they may have been expecting. Let me explain what is happening. The federal government is tightening the spigot on financial aid to states, and municipalities are unprepared for impending cuts. Where is the money going to come from first? Probably from the only bullet towns have to fire: property taxes. Now if you are not a homeowner, you're thinking "so what, that doesn't affect me." Unfortunately, if you are renting, you are going to see the effect of higher property taxes trickle down into the rental fees you are paying. As is the case in most industries, your landlord will likely pass his or her extra costs down to you.

We may also see similar cases to that of Central Falls, Rhode Island this week, where the town decided to file bankruptcy because concessions of existing liabilities, including pension plans. The Wall Street Journal reported yesterday that current negotiations with bondholders may end up reducing pension payments to some retirees by 50%. The average Central Falls city pension is about $32,000 per year.

Getting back to what investors need to consider in this environment, even as the market experiences its current volatility, sitting in cash may work for a short term, but long-term, you will fall behind inflation quickly. I have said this before: the danger with trying to time the market is that you need to be right twice (when you buy and sell). Plus, it can be a nasty habit to fall into. You'll essentially morph into a trader, rather than an investor whose original idea it was to generate income and compounding returns from dividend-paying stocks.

Scaling into positions is the best approach for someone that has money they would like to put to work. You see, the job of investing is not a one-day hit-and-run event. It is, as I always tend to say, like taking care of a garden. If you begin to neglect the garden, it won't be long before the weeds sprout up everywhere and the harvest becomes less and less productive. Don't ever get bored. Stay methodical, look for opportunities, and remain on course by putting funds to work in quality dividend-paying stocks. We always aim to have the "recommended" stocks on our list as names we would either initiate a position in or even add to existing positions. More importantly, begin to use more and more of your savings if you can afford to, and start putting it to work for your retirement or other big event in your life. Investing isn't a sprint, it's a marathon. Veer off course, and your road to success will get longer.

Quick note - We added a great new highly-anticipated feature to our Dividend.com Premium service recently!

You can now choose to receive email alerts for the following events for stocks on your Watchlist:

* Get alerted when your Watchlist stocks are set to go ex-dividend the next day

* Get alerted when a stock on your Watchlist falls more than 25% off its 52-week high

* Get alerted when we upgrade or downgrade a stock on your Watchlist

Please note that these email alerts will be sent out to subscribers each morning at 8:00AM EST (if applicable).

To set up and maintain your Watchlist, be sure to head here:
http://www.dividend.com/premium/my-watchlist.php

Looking ahead to next week, quarterly earnings will continue to trickle in as continue to see how well corporate America did in the second quarter. Watch for earnings results from the likes of Kohl's ( KSS ), Walt Disney ( DIS ), and Macy's ( M ), just to name a few.

Be sure to catch up with our latest watchlist updates this weekend on Dividend.com Premium , including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and much more. And as always, you can view our current recommendations on our industry-leading Best Dividend Stocks List .

Thanks for your support everybody and thanks for reading my newsletter too! Please pass this on to anyone you think we can get inspired and educated about building wealth and using common sense to do so.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Created by Dividend.com


This article appears in: Investing , Stocks

Referenced Stocks: CEC , CF , DIS , ED , KSS

Dividend.com

Dividend.com

More from Dividend.com:

Related Videos

Stocks

Referenced

Most Active by Volume

20,294,217
  • $41.257 ▼ 2.51%
19,287,056
  • $42.1098 ▼ 11.05%
17,747,021
  • $9.67 ▼ 8.77%
14,699,168
  • $14.295 ▼ 10.60%
12,346,678
  • $119.01 ▲ 0.01%
12,284,475
  • $48.43 ▲ 7.69%
12,017,336
  • $26.59 ▼ 1.04%
10,652,716
  • $17.07 ▼ 0.23%
As of 11/28/2014, 10:59 AM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com