Boring stocks are back in style as market wobbles

Older bellwethers like AT&T and Intel are flexing some muscle, filling the void left by investors fleeing momentum names.

By MSN Money Partner Apr 9, 2014 11:48AM
Caterpillar construction equipment (© Kristoffer Tripplaar/Alamy)By Steve Schaefer, Forbes

Don't look now, but some old standbys are back in favor in the stock market. 


Much has been made in the selloff of hot stocks like Netflix (NFLX), Facebook (FB) and what feels like the entire biotech space this year, but in the face of those declines older bellwethers like Intel (INTC), AT&T (T) and Cisco Systems (CSCO) have been flexing some muscle.


The Nasdaq Composite is down 6 percent since hitting its high-water mark on March 6, and some of last year's highest fliers have been among the names dragging it lower. Netflix, Facebook and Tesla Motors (TSLA) each hit their high for the year within a few days of the Nasdaq's peak, and have tumbled 15 percent or more since.


"Investors seem to have been reminded once again that prices frequently lead fundamentals," S&P Capital IQ's Sam Stovall wrote in an April 2 note. 


While he used it to suggest that the spate of soft economic data largely blamed on winter weather should start showing signs of improvement, it also bears repeating in the context of momentum stocks with another earnings season upon us.


While the fast-rising names of 2013 have been swooning ahead of their first-quarter report cards, many of their elders have been picking up speed. Dow components Intel, AT&T and Cisco, hardly anyone’s idea of sexy stocks, are each up better than 5.5 percent over the last month. 


Industrial machinery giant Caterpillar (CAT) -- left for dead by many as emerging markets showed weakness and worse in the first quarter of 2014 -- has made similar gains and even Alcoa (AA), which was booted from the Dow last year, posted better than anticipated results Tuesday and has been in positive territory for the last month.


Compared with the former high-fliers, which include the likes of Google (GOOG) (down 9 percent over the last month), the stronger names of late also offer up the benefit of paying a dividend, which provides at least a dose of insulation should the market's choppiness continue or worsen. Cisco and Intel each carry 3.3 percent yields, while AT&T's tips the scales at more than 5 percent.


The rotation from momentum names into some old stalwarts hasn’t dented the confidence of some when it comes to the former. Stifel Nicolaus made a case for buying stocks like Facebook, Netflix and a few others Tuesday, falling knives be damned.


Wednesday morning brought something of a rebound, with the major averages signaling a higher start and the Nasdaq still trying to make up ground from the back-to-back losses greater than 1 percent to book-end the weekend.


Facebook shares were up nearly 5 percent in Wednesday trading, while Netflix fell by less than 1 percent. Intel was flat and Cisco rose by less than 1 percent.


More from Forbes


 

11Comments
Apr 9, 2014 1:15PM
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So investors are selling stocks that are have historically high price to earnings ratios and buying stocks with lower ratios....... so normal investing then.
Apr 9, 2014 1:23PM
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It's articles like this one that makes one think:

 

Someone is using MSN to promote their own personal agenda..

Apr 9, 2014 1:21PM
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"... buying stocks like Facebook, Netflix [ ... = ] falling knives be damned."  Really?  You mean people don't babble incessantly or watch porno flicks when they are destitute?  Who would have guessed it?
Apr 12, 2014 6:22PM
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They never quit looking for suckers do they? Got to keep the cash cow moving or they all lose their corrupt butts. That's what scares the crap out of them, the day they have to start cannibalizing each other instead of the ordinary citizens that try to make a few bucks in the market. 
Apr 12, 2014 11:22AM
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WALL STREET:


"cash IS a position"


"trust me, they have boosted their dividends 10% every year, forget bonds"


"I'll admit, the dot cloud era will be great, once it all settles out. I can't wait to buy a utility"


"fact is, it's been a fantastic run. Hated? Why because there hasn't been a 10% correction? Individuals are looking to get in. They can read a chart. Let's ride the gravy train to 18K brother!!!"


"if we can just fire one more of our hourly staffers, we could boost our earnings another penny

without having to cannibalize the warehouse"


MAI  STREET:


"I don't want a full-time job. I need to drop the kids at school and be back before the bus drops them off at 3"


"my company dropped our medical, so now I have to look on the exchanges. Because of Obamacare, they don't have to give us anything now"


"2 and a half men" is NOT a TV series. It's the individual workers new reality. Who says you can't get blood from a stone?" 


"I hear companies complaining they can't find qualified workers. Did you see the qualifications? They want someone with way more experience, a turn-key replacement who doesn't call out or ever want more money.......we call them 'foreigners'"  


"I don't have experience with the cloud so unemployment here I come!!!!" 

Apr 12, 2014 11:30AM
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Since the tracking of the stock averages in 1933, The next major climb is going to be around 2016. Expect a major jump and it will stay there with another sideways movement for the next 16 years.
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The grandest of all pyramids! Neanderthals!
Apr 12, 2014 11:27AM
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Look at what the Institutional traders are doing. It is their trading that affects the prices, not our little purchases, ours goes unnoticed. If you want to know what the Stock Market is going to do a few months from now, take a look at what the Institutional traders are dong right now. If you want to know what the trend is going to be today, take a look at what the institutional traders were doing a few months ago. Their trades are large and take a long time to process and are the direct driver for the averages.
Apr 12, 2014 11:21AM
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Kimball International Inc, (KBALB) All criteria point to it being a good risks stock to buy, my source is through Investtools by Ameritrade. Right now it is at $17.82 a share.
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