Industrial Giants See Slowdown Ahead

Plus, three giant stocks that will not -- and cannot -- join the Dow... -------------------------------------------------------------------------------------------------- [View this email in your browser]( Recession rumblings rattle three stock market stalwarts. Plus, three giant stocks that will not — and cannot — join the Dow, and why oil tanker stocks might be less seaworthy than they seem. — Nathan Alderman, Stock Up Editor These Industrial Giants See an Economic Slowdown Ahead --------------------------------------------------------------- We've enjoyed one of the longest economic expansions in U.S. history, pushing the stock market close to record highs. But when a recession looms, some giant stocks' sensitivity to economic changes makes them the (ostrich-sized) canaries in Wall Street's coal mine. And these days, some of those canaries are starting to look like they're, uh, [pining for the fjords](. The absolute numbers still show growth, but the trends emerging tell a darker story. 3M (NYSE: MMM) has plenty of other problems on its plate, but we're most concerned by the struggles in its "short-cycle" businesses — the kind that tend to slump when a recession's right around the corner. For example, sluggish vehicle sales at home and abroad have hurt 3M's automotive business so badly that the company's had to cut both costs and guidance. Industrial conglomerate Rockwell Automation (NYSE: ROK) seems to be singing its own short-cycle blues. It's blaming uncertainty over global trade for its decision to slash its expectations for this year's organic growth — from a projected midpoint of 4.5% in April to just 1.5% in July. Add Eaton (NYSE: ETN) to the flock as well. The power specialist has now cut its outlook twice in 2019, blaming slowing sales into economically sensitive industries such as construction and trucking. The multiple revisions aren't a good sign, especially since round 1 predicted just a 1% to 2% drop in organic sales, and round 2 jacked up that expected decrease to 7% to 8%. [Read the rest]( for more on why each of these companies is starting to worry. --------------------------------------------------------------- Already subscribed to a premium service? [Click here]( to view your subscriptions. Not a member yet? [Click here]( to sign up! --------------------------------------------------------------- Watch: Elon Musk: Tesla Shorts, and Why Big Companies Struggle to Innovate --------------------------------------------------------------- [Elon Musk: The Shorts, and why big companies struggle to innovate]( In 2011, Tesla (NASDAQ: TSLA) CEO Elon Musk came to Motley Fool HQ to talk about the car industry, the struggles that come with innovation, and why big companies have a hard time adapting. This is a segment from that interview. --------------------------------------------------------------- 3 Big-Time Stocks That Will Never Join the Dow Psssst. Want to hear an inconvenient truth? Keep this just between us, but: The Dow Jones Industrial Average is not a very good index. Sure, it's historic, and TV talking heads often mention it in the same breath as that far-superior market measurement, the S&P 500. But with just 30 stocks that come and go at the whims of the wizards behind the curtain at Dow Jones, it's not a good gauge for the market as a whole. And it's price weighted, meaning stocks with the highest share prices — rather than the biggest market caps — have more influence on how the Dow performs. Worse yet, that price weighting means that the Dow excludes certain stocks because their per-share prices are way too high; adding them would throw the whole index out of whack, like putting a gaggle of mice on one end of a seesaw and an elephant on the other. Unfortunately for the Dow and its ability to properly reflect the market, these particular elephantine exiles include some of the biggest, most powerful companies on Earth. - Berkshire Hathaway (NYSE: BRK-A) is a Fool favorite with dozens of diverse companies under its umbrella and a far-ranging stock portfolio on its balance sheet. But at more than $300,000 per share, there's no way it could ever squeeze into the Dow. - If you Google "When will Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) be added to the Dow?" you might not like the results. At more than $1,200 a share, Alphabet would have more influence on the Dow than the existing bottom 50% of its holdings combined. - Amazon.com's (NASDAQ: AMZN) $1,733 share price also leaves it unavailable for Dow delivery — it'd outweigh the bottom 18 of the Dow's 30 stocks. Sure, Jeff Bezos could probably just buy Dow Jones outright and change the rules, but we figure he's got more important things to worry about. [Read the rest]( to learn more about why the Dow just can't get down with companies as big as these. --------------------------------------------------------------- [Smart Speaker] Not sure what to ask your smart speaker? Keep up with what's happening in the market by adding our daily flash briefing to your home assistant. Just look for The Motley Fool on your Amazon Alexa or Google Home app, click subscribe, and then you're good to go. --------------------------------------------------------------- Why Oil Tanker Stocks Are the Hottest Spot in Energy Today Between the Trump Administration sanctioning foreign oil suppliers and the threat of more attacks on oil infrastructure like the drones that struck Saudi Arabia, the oil markets aren't exactly calm these days, even if the price of oil itself is still headed south. With investors betting that more oil will need to be shipped more places, the market for oil tankers and the companies behind them has gotten red hot. There's just one problem: In general, tanker stocks are not that great at making money for investors. The long-term contracts they sign to ride out ups and downs in the industry mean that most of them can't take full advantage of the current higher demand. And they face too many competitors, who can too easily add capacity, eroding the entire industry's competitive advantage. If you don't believe us, believe the yikes-inducing 10-year stock chart of industry heavyweights awaiting you in our full article. [Read the rest]( to see why tankers might not remain buoyant for long. --------------------------------------------------------------- FEATURED PODCAST --------------------------------------------------------------- [Motley Fool Money]( Brokerage Madness, Pepsi's Pop, and Wrestling Smackdowns The brokerage industry races to the bottom as commission fees hit zero; healthier fare adds fizz to Pepsi's shares; and we cut a promo for the pro wrestling industry. 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