They say a rising tide lifts all boats but it would be a mistake to think that everyone got safely on board that boat and is now enjoying the ride. I am referring to the 7% year-to-date market stampede that marks the fastest start for stocks since 1987.
This week's earnings reports are a perfect way to decipher which companies are the haves and have-nots are in 2012 and what that says about investor taste right now.
Take Coca-Cola (KO), for example. The soft drink giant released results this morning showing Q4 earnings per share estimates beat by a penny with 5% revenue growth that was in-line with consensus at $11.0 billion. While Coke is able to show double-digit growth in China and India, its sales volume in the U.S. and Europe were up by just 1%, no small feat given the economic strain, but hardly the stuff of dreams.
Not surprisingly, Coke has not participated in the risk-on rally this year, as investors have gotten their growth fix elsewhere. But there's a 2.8% dividend that's rising, and proven ability to grow sales in each of their five geographic operating groups. I think this blue chip could quickly come back in to favor, or as Macke says in the attached clip, "it's the stuff you have to pay attention to when everyone's bored."
Far more attractive to Macke is Walt Disney (DIS) which will report its first quarter earnings results after the close of trading today.
While Disney offers multiple ways to play the consumer via its five business units --Media Networks, Theme Parks, Studios, Consumer Products and Interactive Media-- the 5% sales and EPS growth analysts are looking for seems modest compared to the stock's 40% rise from its 52-week low in October.
"You get everything you want to see, one stop shopping for the consumer," says Macke about Disney.
If possible, he is more excited about Cisco (CSCO), "a stock that he and everyone should own." The tech company which is up 12% this year and 50% from its August lows, reports its latest earnings results this Thursday after the market close.
I believe performance of these blue chips is more about flavor than results, as cyclicals have rallied and defensives have been left for dead. If and when investor taste changes at some point this winter, you'll probably wish you had stored a few of your acorns in Staples, Healthcare, Utilities or Telecom.
What do you you think? Give us your feedback in the Comments section below, or reach out to me @MattNesto on Twitter or on our Breakout Facebook page.