Trending: Defense Stocks and Gold Trend as Investors Worry About North Korea
Brian Mathews Aug 18, 2017
Dividend.com analyzes the search patterns of our visitors each week. By sharing these trends with our readers, we hope to provide insights into what the financial world is concerned about and how to position your portfolio.
This week’s trending stocks center on the global tensions of nuclear war between the United States and North Korea. Nvidia stock tanked and then promptly rebounded after beating second-quarter earnings. After President Trump made comments in response to North Korean threats, defense stocks like Lockheed Martin reached new highs. Home Depot also saw a decline with worries that Amazon may be a potential threat. Finally, the price of gold increased on continued fears and uneasiness about the relationship between the U.S. and the Korean Peninsula.
Our last trends article focused on Apple’s upbeat earnings and the FDA’s new plans to reduce nicotine levels in cigarettes, leading to a fall in the stock price of companies like Altria. You can view the article here to see how the trends have been changing.
Nvidia Tanks Despite Beating Earnings
The graphics chipmaker, Nvidia Corporation (NVDA ), was this week’s top trending topic with a 118% increase in viewership. Last week, the company announced its second-quarter earnings, which came in higher than anticipated. On an earnings-per-share basis, NVDA earned $1.01 per share versus analysts’ expectations of $0.70 per share. Revenue also beat, coming in at $2.23 billion versus the $1.96 billion estimated. However, the stock still plummeted 7% on Friday, the day immediately after the release. This was attributed to investors who were disappointed over the company’s data center segment sales, which came in at $416 million versus the $423 million expected. However, the following Monday, the stock surged 6% following Canaccord Genuity’s positive recommendation.
Over the last week, the stock is still down 1.54% for the week but has been a stellar performer on a year-to-date basis, up over 54%. The stock has skyrocketed to nearly 163% in the trailing one-year and is up over 1,025% in the trailing five-years. The stock has outperformed both the technology sector and the S&P 500 for all three time periods. Unlike most of its technology peers, NVDA does pay a slight dividend of 0.34%, or $0.56 annually. Even though it is a relatively smaller dividend yield for the traditional income-seeking investor, the company has raised its dividends over the last four years.
To view a list of the top semiconductor dividend stocks, click here.
Defense Stocks See New Highs over North Korea
The defense sector reached all new highs across the board this week after news of U.S. President Trump making threats toward North Korea, which increased tensions in the area. North Korea recently made claims that it has successfully created a miniaturized nuclear weapon that can fit into its missiles and that their leader Kim Jong-un is not afraid to use them. This caused the aerospace & defense sector to be the second-most trending topic of the week, up 105%. One of the biggest movers for the week was Lockheed Martin Corp. (LMT ), which was up 3.50%. Other defense companies like Northrop Grumman Corp. (NOC ) and Raytheon Corp. (RTN ) were also up, 0.68% and 3.93%, respectively.
Lockheed Martin has performed very well so far for 2017 and is up over 22% on a year-to-date basis. On a trailing one-year basis, LMT is up just over 19%, but for the trailing five-years is up over 235%. The company has paid a consistent dividend and raised it over the last 14 years. It is currently yielding 2.38% and pays an annual amount of $7.28 per share.
To see other aerospace & defense stocks, click here.
Home Depot Drops over Amazon Fears
Home Depot Inc. (HD ) released earnings on Tuesday and beat expectations all around, causing the company to raise its forecasts for the second time this year. As a result, HD was the third-most trending topic this week, up 53%. HD reported an EPS of $2.25 per share, which beat analysts’ expectations of $2.22. Revenue also beat, coming in at $28.11 billion versus $27.84 billion. Despite the good news, the stock still dropped 3% on the day. Many investors believe that the Amazon-effect is to blame. Home Depot was generally thought as resistant to the competition of the giant online retailer, Amazon Inc. (AMZN ). However, the same was once also thought for the auto parts industry, which is now being threatened by Amazon. One of the worries that face Home Depot is that Kenmore appliances are now starting to be offered on Amazon. If more companies begin to list their offerings directly to consumers through Amazon, Home Depot and other major retailers could see a decline in sales.
Since the release on Tuesday, the stock has stabilized, but is still down 1.83% for the week. On a year-to-date basis, HD is up 13.68%, which is outperforming the S&P 500. However, the stock is lagging the index over the trailing one-year, with a return of 11.88% versus the S&P 500’s 13.33%. At the same time, the stock has performed very well over the last five years and is doubling the total return of the S&P 500 with over a 187% return. HD pays a sizeable dividend, currently at $3.56 on an annual basis or a 2.34% dividend yield. The company has rewarded its shareholders, not only with price appreciation but also consistent dividend hikes since 2013.
To view other services stocks that pay a dividend, click here.
Gold Spikes on Global Tensions
The fourth-most trending topic this week revolves around gold, up 50%. This again revolves around the turmoil between the United States and North Korea and the potential threat of nuclear war. In times of turmoil or distress, the price of gold tends to spike, like it did over the last week. The SPDR Gold Trust ETF (GLD) was up nearly 1.5% in the day after President Trump made his “fire and fury” comments in response to North Korean threats.
However, one downside to owning gold is that it does not pay a dividend. Investors seeking an income-paying company could look to Barrick Gold Corp. (ABX ). Barrick Gold Corp. is one of the world’s largest gold mining companies, which is directly affected by the price and demand for gold. Over the last week, ABX is up 1.08% and beating the return for GLD, up 0.46% for the same time. On a year-to-date basis, Barrick Gold is up 5.82% but down over 22% for the trailing one-year. The stock currently has an annual payout of $0.12 per share, which equals a dividend yield of 0.71%.
Check out our Dividend University section to learn more about dividend investing.
The Bottom Line
Most of this article was based on the recent news of talks between President Trump and North Korea. Nvidia stock was volatile after plummeting 7% one day and rebounding 6% the next. Lockheed Martin, Northrup Grumman and Raytheon all gained to new highs. Home Depot beat earnings yet still saw a decline in stock price. Finally, the price of gold turned positive thanks to uneasiness in the world.
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