You may have heard of the “Dogs of the Dow”, that is those brand-name stocks in the Dow Jones Industrial Average (the Dow) that have been thoroughly beaten down in price and are poised to rebound. But have you heard of the “Dinosaurs of the Dow”? Somewhat of an offshoot of the “Dogs”, the Dinosaurs of the Dow, as discussed in a recent Barron’s article, are a group of iconic American firms that are or were part of the Dow, were severely depressed in price in 2018, and are now rising quite nicely so far in 2019.
As discussed in the article, the seven Dinosaurs of the Dow are AT&T (T), International Business Machines (IBM), General Electric (GE), American International Group (AIG), General Motors (GM), Alcoa (AA) and United States Steel (X). The stocks of these iconic firms are all up in price so far this year. Leading the way is GE with a 29.5% rise from the 2018 closing price.
Each of these companies has a story to tell of how it fell from grace with investors. Take General Motors for instance: the car manufacturer was forced to seek bankruptcy protection after the U.S. financial crisis. Since then, the company is attempting to weave its way through a myriad of headwinds including changing customer preferences, foreign competition, and technological changes. General Electric is another interesting story. The conglomerate’s assets have fallen by $520 billion from 2008 to the end of 2018. General Electric has a new CEO, H. Lawrence Culp, Jr., previously of Danaher Corporation, who appears to be putting in place GE’s steps back to success.
Does the fast start in 2019 for these firms bode well for continued upside? Each of these companies still faces many issues. Only time will tell whether their glorious yesteryears will be repeated in new future incarnations, to the benefit of their customers and shareholders.