In my final “Fool Revisited” post this week, I will be finishing off my mini-series on the Dow with the remaining seven components of the Dow (at least at the time). The previous three entries of this group covered the oldest members of the Dow, the newest members, and a group where each company had at least 20 years as a member of the Dow Jones. This final article talks about the remaining seven companies, and as mentioned in my article, all these companies were added on two separate days in the late ‘90s: March 17, 1997 and November 1, 1999.
This group features the first companies – Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT) added to the average that were not listed on the New York Stock Exchange, a pretty big deal at the time. (They were later followed by Apple and Cisco Systems). This list also features two companies that were removed from the Dow in subsequent years – Hewlett-Packard (NYSE: HPQ) left the average in 2013 and AT&T (NYSE: T) was replaced by the aforementioned Apple in 2015.
Like the other articles in this series, I just wanted to measure performance of the individual components to see if the presence on the Dow drove performance. With this group, I only looked at the 10-year CAGR for some reason, which was probably in line with the whole “Decade of Performance” indicated in the title. However, the CAGR for each of these companies since I wrote my initial article 6+ years ago (November 12, 2011) has greatly exceeded that 10-year CAGR covered in the original article (through March 2, 2018):
|Stock||Start Price||End Price||CAGR||Total Growth||Value of $10,000|
|Johnson & Johnson (NYSE: JNJ)||$54.20||$128.82||14.71%||137.68%||$23,768|
|Walmart (NYSE: WMT)||$50.39||$88.24||9.29%||75.11%||$17,511|
|The Home Depot (NYSE: HD)||$33.25||$177.45||30.41%||433.68%||$53,368|
Source: Yahoo! Finance & author calculation; Stock prices include dividends & stock splits
The performance of Home Depot and Microsoft probably has nothing to do with their listing on the Dow. If that was the case, the others profiled in this series would have had similar performance as well. Walmart, for example, operates in a similar industry as Home Depot, yet the specialty retail aspect of Home Depot allowed them to emerge relatively unscathed as consumers have moved a lot of their purchases online. Microsoft transitioned from a software company focused on Windows and Microsoft Office to one that is at least partially driven by their focus on cloud computing.
Will Home Depot return over 500% over the next 6 years? Will this focus on cloud computing and other services continue to drive Microsoft to such lofty heights? It’s hard to say, but the point of it all is that their presence on the Dow has not affected their performance over the past 6 years, let alone the last 20 years.
Until next time…
Disclaimer: I do not own currently own shares in any of the mentioned companies, and I have no plans to purchase shares of any company within the next 60 days in any account in which I manage investment funds. You can read a little about my personal investment philosophy here.