DOW Hits 29,000
Neil Hennessy is founder and chief investment officer of Hennessey Advisors Inc., a $6.6 billion publicly traded investment management company that offers 14 mutual funds to the public. November 2013, when the Dow stood at 16,000 he predicted the DOW would hit 20,000 within the next five years and in 2017 the DOW hit 20,000. When the DOW hit 20,000 in 2017, Neil said the DOW is on its way to 30,000.
The Dow, however, is just 30 out of thousands of stocks. Furthermore, the index is price-weighted and does not account for changes in market capitalization as other popular indices do. A price-weighted average is used to give higher-priced stocks more influence in an index. So, its a bit misleading of what's going on in the broader market...even among 30 stocks.
Less than 30 days ago, the DOW it 28,000 and this morning the DOW it 29,000...a thousand point move. But three stocks were responsible for 65% of the 1000 point move higher.
Apple - responsible for 308 points
Apple stock soared to new highs Thursday following reports that December iPhone shipments in China had risen by about 18% from 2018. Then there is the Apple Store. App Store customers spent a record $1.42 billion between Christmas Eve and New Year’s Eve, a 16% increase over last year, and $386 million on New Year’s Day 2020, a 20% increase over last year and a new single-day record.
But Apple’s move to $300 is causing analyst to revise their price targets. RBC Capital Markets’ Robert Muller maintained his “outperform” rating on AAPL stock and raised his price target on AAPL to $330 from $295. Bank of America’s Wamsi Mohan reiterated his “buy” rating and lifted his price objective on the shares to $330 from $290.
United Health - responsible for 182 points
Goldman Sachs - responsible for 162 points
Bank of America's Michael Carrier upgraded Goldman Sachs stock from Neutral to Buy with a price target of $270 per share, citing a favorable macroeconomic backdrop benefiting the near-term outlook and strategic repositioning that could create benefits over the long term. The analyst also sees an opportunity for an improving return on equity (ROE) for the brokerage firm.
Buckingham's James Mitchell upgraded the stock from Neutral to Buy with a price target of $290 per share, saying that brokerage stocks are less expensive with modest growth expectations compared to banking stocks. According to Mitchell, a rebound in capital markets activity could drive upward EPS revisions, creating an opportunity for rising earnings and valuation multiples.
Honorable Mentions include:
McDonald's - responsible for 105 points
Visa - responsible for 98 points
Microsoft - responsible for 84 points
Johnson and Johnson - responsible for 70 points
Had Neil Hennessy told me in 2017 when the DOW was at 20,000 that the DOW would hit 30,000, I would of said he was crazy. But now Neil is looking like one of the most sane people on Wall Street.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.