Business & Real Estate
- Published on Wednesday, 09 July 2014 01:03
- Written by Clyde Noel
July is a cool time to own stocks. If you’re thinking of going on vacation to a sandy beach, you better keep in touch. The Dow Jones industrial average topped 17,000 for the first time Thursday on a bullish June jobs report.
With the market closed Friday for Fourth of July, Thursday the Dow was up 92.02 points at a record-high 17,068.26. The S&P 500 closed at 1,985.44, just short of a new 52-week high.
For the past 20 years, the Dow Jones industrial average has posted gains of 1.1 percent in July and increased 65 percent of the month. In other summer months, however, the Dow has made investors sweat, with historical declines in August and September.
While some investors claim that big, round numbers like 17,000 are meaningless, one thing is evident: An impressive jump in corporate profits has fueled the market’s equally impressive run.
Investors should maintain a nearly fully invested position and keep looking for opportunities in reasonably good companies. However, don’t hesitate to sell the stock of companies that you have questions about – there are many companies with better-than-expected results.
Two local companies are in the news.
• Google Inc. (GOOG; $579.95) entered the music business last week with its acquisition of Songza, the music service that plays songs based on your mood. The purchase price was reportedly somewhere around $15 million.
If you’re on Main Street in Los Altos, you may see Google’s self-driving car maneuvering through traffic. Now the vehicle can serenade you with streaming music.
Google has a variety of options for Songza use. Users will be able to upload libraries to the cloud or purchase albums through Google Play.
Silicon Valley companies are snapping up music services – Apple Inc. recently paid $3 billion for Beats Electronics, and Twitter Inc. recently discussed acquiring SoundCloud.
With no immediate changes to Songza on the horizon, the service will continue as usual for Android users. Google officials reported that the company would move Songza operations to Google’s New York offices this summer.
“Over the coming months, we’ll explore ways to bring what you love about Songza to Google Play Music,” stated a Google release.
Looking ahead, Google plans to develop three smartphones to market in India for under $100. The company is also designing a tablet that displays 3-D images for launch in 2015.
Most analysts still consider Google stock a strong buy.
• Cisco Systems Inc. (CSCO; $25.18) has been one of the best-performing Dow Jones industrial stocks this year. Year to date, its 14.7 percent gain ranked it among analysts’ top stocks to buy for 2014.
The driving forces are the company’s earnings and its business outlook. The 52-week range price is $20.22 to $26.49, and Cisco continually purchases its own stock, yielding a solid 3.1 percent dividend.
The rating team at The Street considers Cisco stock a buy on the basis of positive investment measures. The company’s strength provides its attractive valuation levels. The gross profit margin is high at 65.34 percent, prompting a net profit margin of 18.94 percent.
Other investment firms are high on Cisco and report a history of outperformance. Nine firms deem the stock a strong buy. The median target price for stock is $27, with a high of $30.
Clyde Noel is a Los Altos Hills resident and longtime investor in stocks.