The Coca-Cola Company (KO), Wal-Mart Stores, Inc. (WMT), Microsoft Corporation (MSFT): The Dow (.DJI)’s 5 Most Loved Stocks

Page 1 of 3

Short-sellers may be enjoying a little bit of a victory, with the markets having their worst month in more than a year, but that victory only equated to having the iconic Dow Jones Industrial Average lose 4.4% for August. While optimists would certainly love that figure to be positive, in the grand scheme of things, this drop was pretty small.

Since hitting its decade lows during the Great Recession, the Dow has risen by more than 125% on the heels of a rebounding housing market, a jobs market that is delivering the lowest unemployment rate we’ve seen in five and a half years, and a strengthening financials sector that’s ripe with capital and now well prepared should another deep recession occur.

As you might imagine, not everyone agrees. A few days earlier we examined some of the Dow’s most hated companies — in essence, the companies that short-sellers are targeting the most — and found it to be riddled with metal, mining, and commodity-based stocks.

Today, we’re going to turn the tables and examine the five most loved Dow components. These are companies that just seem to consistently produce profits in any economic environment, and they often make for poor short-sale opportunities. More than just loved, these five stocks gives us insight into what to look for in steady businesses so that we can scour the markets and identify similar characteristics in other companies.

Here’s a look at August’s five most loved Dow stocks:

Company Short Interest As a % of Outstanding Shares
The Coca-Cola Company (NYSE:KO) 0.61%
Wal-Mart Stores, Inc. (NYSE:WMT) 0.63%
General Electric Company (NYSE:GE) 0.67%
Microsoft Corporation (NASDAQ:MSFT) 0.69%
The Procter & Gamble Company (NYSE:PG) 0.70%

Source: S&P Capital IQ.

Coca-Cola

Why are short-sellers avoiding The Coca-Cola Company (NYSE:KO)?

I consider the only injustice on this monthly list to be when The Coca-Cola Company (NYSE:KO) isn’t atop the most loved Dow Jones components. There are few brands, if any, that can rival the geographical diversification of Coca-Cola. With its recent expansion into Myanmar, there are now just two countries on the planet where Coca-Cola doesn’t sell its products. To further pat Coca-Cola on the back for its diversification, if you were to try one new Coke product every day, it would take you more than nine years to get through them all! With a steady stream of cash flow and a diverse range of products, short-sellers are keeping their distance from Coke.

Do investors have a reason to worry?

Nothing short of a global depression is going to cause serious worry among Coke shareholders. The Coca-Cola Company (NYSE:KO) is one of the most recognized brand names in the world, and it certainly spends a pretty penny more than its peers on advertising. Although it’s probably seen an end to its rapid expansion days, energy drinks and new offerings will keep the hamster spinning on the wheel, which should allow the company to continue to crank out slow but steady top- and bottom-line growth.

Source: WalMart, Flickr.

Wal-Mart

Why are short-sellers avoiding Wal-Mart Stores, Inc. (NYSE:WMT)?

The reason most short-sellers keep their distance from Wal-Mart has to do with its premier pricing power as America’s largest retailer, and its extremely low beta of just 0.33. To begin with, Wal-Mart is so large and capable of producing so much cash flow that it can simply undercut local business prices to drive business into its own stores and create loyal customers. The other factor here is its low beta — a measure of volatility. In this case, Wal-Mart Stores, Inc. (NYSE:WMT) is only about a third as volatile as the S&P 500. Short-sellers are rarely long-term-minded and usually out for the quick buck, which makes Wal-Mart an easy pass for many of them.

Page 1 of 3

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!