Big Stocks, Bigger Problems

2/6/2017


Even market leaders with widely recognized brands and illustrious histories fall on hard times. Consider the 10 stocks listed at the top of the table below. Their market values exceed $100 billion, placing them among the largest 8% of companies in the S&P 500 Index.

But they perform terribly in Quadrix, reflecting several troubling factors. None of them looks cheap based on trailing earnings or estimated year-ahead earnings. With the exception of PepsiCo ($103; PEP), all have posted lower per-share profits over the past 12 months. Analyst-estimate revisions for this year are trending downward.

Conversely, the three giant companies at the bottom of the table earn outstanding Quadrix scores. They, too, have problems — just not ones measurable by a quantitative system.

AbbVie ($61; ABBV) relies heavily on arthritis drug Humira, facing slower growth and potential competition from forthcoming biosimilars. Drug prices also remain a politicized issue.


General Motors ($36; GM) shares look quite cheap, largely due to concerns that U.S. auto sales are due to fall in 2017 after seven years of growth.


Wells Fargo ($56; WFC) faces rising legal fees and consumer mistrust from its phony-account scandal.


For investors interested in megacap stocks, we suggest Alphabet ($815; GOOGL), with Overall and sector-specific scores above 85. Alphabet is a Focus List Buy and a Long-Term Buy.

BEWARE OF THESE BEHEMOTHS
Some of the most famous firms are listed below. The 10 at the top are Quadrix duds; the bottom three score well but face company-specific problems.
Stock-
Market
Value
($Bil.)
Est. EPS
Change,
Year
Ahead
(%)
Trailing
P/E
Ratio
---------- Quadrix Scores ----------
Company ( Price; Ticker)
Momen-
tum
Value
Earns.
Ests.
Overall
Rating
Chevron
($111; CVX)
210
396
118
41
49
53
32
C
(below avg.)
Coca-Cola
($41; KO)
180
1
21
17
37
32
24
C
Exxon Mobil
($83; XOM)
346
78
39
26
32
12
17
C
General Electric
($30; GE)
264
9
20
56
59
6
37
C
Kraft Heinz
($88; KHC)
109
25
29
60
32
18
32
C
Novartis ($73; NVS)
176
NA
 NA 
31
49
NA
31
C
PepsiCo ($103; PEP)
150
8
22
34
45
24
37
C
Philip Morris Int'l
($96; PM)
149
11
23
17
30
12
20
C
Procter & Gamble
($87; PG)
239
6
23
23
36
8
26
C
Schlumberger
($83; SLB)
116
55
72
4
13
2
4
C
AbbVie ($61; ABBV)
99
14
13
54
88
63
89
B
(average)
General Motors
($36; GM)
57
(6)
6
92
98
85
99
A
(above avg.)
Wells Fargo
($56; WFC)
284
3
14
68
83
94
94
B

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