The stock market's rebound was short-lived, with all three main equity indexes closing lower Thursday. Sparking the sell-off was a round of disappointing blue-chip earnings, while market participants also kept an eye on geopolitical headlines, with little sign of a peace deal in sight.

First-quarter earnings season is in full swing, and the latest batch of corporate reports made plenty of noise. Tesla (TSLA), for one, fell 3.6% as the electric vehicle maker's Q1 beat was overshadowed by a big increase in spending.

Specifically, the company has carved out $25 billion for capital expenditures this year — a notable increase from 2025's $8.5 billion.

"We're investing in and improving our core technologies, battery powertrain, AI software, AI training, chip design, manufacturing — laying the groundwork for significantly increased manufacturing and production," said CEO Elon Musk on Tesla's earnings call.

Musk added that the company is also strengthening its supply chain ahead of output increases for its vehicles, as well as for Optimus, its humanoid robot.

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"While we continue to have concerns regarding the company's spending binge, we are also more bullish on near-term margin and operating cash flow profile," says CFRA Research analyst Garrett Nelson, who upgraded the Magnificent 7 stock to Hold from Sell. "Moreover, consensus estimates have come down to levels we think are more achievable and now consider the stock's risk/reward more balanced following TSLA's recent underperformance."

Shares are down nearly 17% for the year to date vs the S&P 500's roughly 4% gain.

IBM hikes dividend but stock dives 8.3%

Elsewhere on the earnings calendar, International Business Machines (IBM) reported first-quarter earnings of $1.91 per share on revenue of $15.9 billion, beating analysts' estimates for earnings of $1.81 per share on revenue of $15.6 billion.

Big Blue also raised its quarterly dividend by 1 cent to $1.69 per share. IBM is one of the best dividend stocks for dependable dividend growth, having raised its payout for 31 straight years.

But the Dow Jones stock fell 8.3% today after the software giant failed to raise its full-year guidance. Signs that its Red Hat Hybrid cloud business is growing slower than peers also weighed on shares, says Argus Research analyst Jim Kelleher.

Still, Kelleher reiterated a Buy rating on IBM, saying "prospects for this business in 2026 appear to be positive."

ServiceNow suffers its worst day ever after earnings

ServiceNow (NOW) was another software stock that fell sharply after earnings, sinking 17.8% — its biggest one-day drop on record.

The software-as-a-service (SaaS) platform that uses AI to automate workflows for companies beat on both the top and bottom lines for Q1. However, ServiceNow said that the ongoing conflict in the Middle East impacted deal timing and weighed on first-quarter subscription revenue. The Iran war also caused NOW to give conservative guidance.

"ServiceNow's Q1 results are good but show lower beat magnitudes. In addition, management took a prudent approach to Q2 cRPO [current remaining performance obligation, a key revenue metric] growth and 2026 guidance to reflect continuing geopolitical headwinds and acquisition integration expenses," says Oppenheimer analyst Brian Schwartz.

But Schwartz maintained an Outperform (Buy) rating on the tech stock, saying he's "encouraged that the AI business looks positioned to exceed 10% of total revenue this year given prudent guidance and strong demand for AI technology."

No signs of progress in the Middle East

As for the conflict in the Middle East, today's headlines centered on President Donald Trump's Truth Social post that he has "ordered the United States Navy to shoot and kill any boat, small boats though they may be (Their naval ships are ALL, 159 of them, at the bottom of the sea!), that is putting mines in the waters of the Strait of Hormuz."

The lack of resolution lifted oil prices Thursday, with front-month West Texas Intermediate crude futures climbing 3% to $95.95 per barrel.

But stocks fell, with the blue-chip Dow Jones Industrial Average declining 0.4% to 49,310, the broader S&P 500 dropping 0.4% to 7,108, and the tech-heavy Nasdaq Composite shedding 0.9% to 24,438.

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International Business Machines (IBM) stock is notably lower in Thursday's session after the technology giant topped third-quarter profit expectations but came up short of revenue estimates.

In the three months ended September 30, IBM's revenue increased 1.5% year over year to $15 billion, driven by a 9.7% jump in sales in its software segment to $6.5 billion. Its earnings per share (EPS) were up 4.6% from the year-ago period to $2.30.

The results were mixed compared with analysts' expectations. Wall Street was anticipating revenue of $15.1 billion and earnings of $2.23 per share, according to CNBC.

"Our third-quarter performance was led by double-digit growth in Software, including a re-acceleration in Red Hat," said IBM CEO Arvind Krishna in a statement. "We continue to see great momentum in artificial intelligence as our models are trusted, fit-for-purpose, and lower cost, with performance leadership. Our generative AI book of business now stands at more than $3 billion, up more than $1 billion quarter to quarter."

For the fourth quarter, IBM said it expects revenue growth consistent with the third quarter. The company also reiterated its full-year forecast for more than $12 billion in free cash flow.

Free cash flow is important to investors because companies "can do a number of useful things with it, such as pay dividends, buy back its stock, acquire other companies, expand its business and knock out its debts," writes Kiplinger contributor Will Ashworth on the importance of good cash flow.

And for IBM, specifically, some of its free cash flow is used to consistently pay and grow its dividend. Indeed, IBM is one of the best dividend stocks for dividend growth, having increased its payout annually for the past 29 years. 

Is IBM stock a buy, sell or hold?

Even with Thursday's post-earnings slump, IBM has been one of the best Dow Jones stocks in 2024, up 46% for the year to date on a total return basis (price change plus dividends). But Wall Street doesn't think there's much more room to run.

According to S&P Global Market Intelligence, the average analyst target price for IBM stock is $214.85, which represents a discount to current levels. Additionally, the consensus recommendation is a Hold.

Not everyone is on the sidelines, though. Financial services firm Stifel is one of the more bullish outfits on the blue chip stock, as evidenced by its Buy rating and $246 price target.

"IBM has re-rated higher relative to S&P 500 reflecting improving execution, free cash flow growth and the company's defensive characteristics," says Stifel analyst David Grossman. “We believe the risk/reward remains attractive as the stock could continue to re-rate further with consistent software revenue growth (Red Hat, ELA cycle, and HashiCorp acquisition), the upcoming mainframe cycle and continued free cash flow growth."

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Investors were likely on pins and needles heading into Thursday's session after markets sold off sharply Wednesday. A slow start turned into a mixed finish, with blue chip stocks outperforming thanks to a positive earnings reaction for International Business Machines (IBM).  

The first reading on second-quarter gross domestic product (GDP) showed the U.S. economy grew at an annual rate of 2.8%, far exceeding Q1's 1.8% rate and economists' expectations for 2% growth.

True, this is the first reading of Q2 GDP and there could be revisions down the road. But Matt Peron, global head of solutions at Janus Henderson Investors, says the data "does lend support to the soft-landing narrative."  

Peron adds that the report should also "provide some relief to stressed markets by showing that the second quarter was generally solid. However, we note that the economy does seem to be downshifting and that may cause continued volatility in the coming months."

Durable goods fall for the first time in five months

Elsewhere on the economic calendar, data from the Census Bureau showed durable goods orders dropped by 6.6% from May to June. As Wells Fargo economists Shannon Seery Grein and Tim Quinlan note, this is the worst durable goods reading since the start of the pandemic and the first decline in five months. 

The economists add that while the sharp decline in new orders "overstates weakness in capital expenditures demand," they remain cautious considering companies are facing higher costs to finance the purchase of new equipment. Uncertainty surrounding the outcome of this fall's presidential election could also weigh on equipment demand in the near term, the economists say. 

Buffett sells 52 million Bank of America shares

In single-stock news, Bank of America (BAC, -1.2%) made headlines after regulatory filings revealed Warren Buffett's Berkshire Hathaway (BRK.B, +0.1%) sold more than 52 million shares of the financial stock over a six-day period beginning July 17.

Buffett first gained exposure to BAC back in 2011 when he invested $5 billion to boost the big bank's finances following the Great Recession. He exercised warrants in 2017 and at the end of Q1 2024, Bank of America was the second-largest holding in the Berkshire Hathaway equity portfolio. 

Given BAC was up 31% for the year to date through July 16, some of this selling may be the result of profit-taking. Or, along the same lines as why Buffett sold Apple shares earlier this year, it could also be for tax reasons. 

IBM, Ford make notable post-earnings moves

The real action Thursday was on the earnings calendar. Shares of Chipotle Mexican Grill (CMG), for one, fell 1.9% even after the burrito chain beat analysts' top- and bottom-line expectations for its second quarter. The fast-casual restaurant chain's strong financial performance was driven by new store openings and an 11.1% increase in comparable-restaurant sales.

CFRA Research analyst Siye Desta downgraded CMG stock to Hold from Buy after earnings, saying the company's commitment to generous portions could negatively impact margins.

Ford Motor (F) stock was another post-earnings loser, plunging 18.4% for its biggest one-day drop since 2008 after the automaker fell short of earnings expectations for its second quarter. Despite the earnings miss, the company raised its full-year outlook for free cash flow.

On the plus side of the ledger, IBM stock rose 4.3% after the technology giant beat top- and bottom-line expectations for its second quarter and hiked its 2024 free cash flow forecast.

These increased free cash flow estimates are important for investors because companies will often allocate some of this available money to spend toward shareholder-friendly initiatives such as stock buybacks and dividends. 

IBM's post-earnings pop helped the Dow Jones Industrial Average  outperform, with the 30-stock index finishing up 0.2% to 39,935. The S&P 500 slipped 0.5% to 5,399 and the Nasdaq Composite added 0.9% to 17,181.

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Few companies are more closely associated with the rise and dominance of the American technology industry over the course of the 20th century than International Business Machines (IBM).

The company that came to be known as Big Blue is sort of the O.G. of big tech stocks. IBM, founded before World War I, became the industry leader in pretty much every market it entered, from early punch-card tabulating systems to electric typewriters to mainframe and personal computers.

IBM stock was a fantastic buy-and-hold bet over those many decades. From 1926 to December 2019, IBM created $525.9 billion in shareholder wealth, according to research by Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University.

Only seven U.S. stocks generated better returns for shareholders over that span.

Times change. IBM ceded ground to any number of peers, including some of the Magnificent 7 stocks sporting multitrillion-dollar market caps today. The result? Shares in this long-time Dow Jones stock have been a major disappointment for decades.

As a member of the S&P 500 Dividend Aristocrats, IBM is a top-notch name for dependable dividend growth. Not only has the company paid consecutive quarterly dividends since 1916, it has increased its payout annually for 30 years and counting.

However, even after factoring in those reliable and rising dividends, IBM stock has been a market laggard over the long haul.

The bottom line on IBM stock?

IBM stock has been mounting a comeback over the past few years, but as a truly long-term holding, it's been a serious market laggard.

Here's the breakdown: IBM stock's all-time annualized total return (price change plus dividends) comes to 4.6%. The S&P 500 generated an annualized total return of 10.8% over the same span.

It doesn't end there. Shares in the tech giant beat the broader market on an annualized total return basis in the past three- and five-year periods, but lag badly over longer time frames.

It should come as no surprise that if you invested a grand in IBM stock a couple of decades ago, you would be deeply disappointed by the results today.

Have a look at the above chart, and you'll see that if you put $1,000 into IBM stock 20 years ago, it would be worth about $5,700 today. That's good for an annualized total return of 9.1%.

The same sum socked away into an S&P 500 index fund over the past two decades would be worth almost $8,300 today, or 10.9% annualized.

The bottom line? Big Blue has been a buy-and-hold bust in the 21st century.

As for where IBM stock goes from here, Wall Street is cautiously bullish on the name. Of the 22 analysts covering the stock surveyed by S&P Global Market Intelligence, 10 call it a Strong Buy, two say Buy, eight have it at Hold, one says Sell and one rates it at Strong Sell. That works out to a consensus recommendation of Buy with mixed conviction.

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The S&P 500 just wrapped up its worst first-half performance since the Nixon era, with shares ending down more than 20% for the six-month period. Few areas of the market were spared; but, fortunately, investors can look to the Dividend Aristocrats to help cushion the blow – and now, they can get some of these elite income plays on the cheap.

The Dividend Aristocrats are a group of 65 S&P 500 dividend stocks that have increased their cash distributions for at least 25 years in a row. And when equity markets are in turmoil, investors tend to shift towards more defensive strategies in an effort to help preserve wealth. One of the best safe havens for investors can be found with the Dividend Aristocrat stocks, which are noteworthy for their resilience and steady income.

The defensive characteristics of Dividend Aristocrats is evidenced by their proven ability to outperform other stocks during market downturns. During the 2008 market crash, for example, S&P 500 stocks lost 37% of their value, but the Dividend Aristocrats declined only 22%.

Similarly, during the 2002 bear market, when the S&P 500 stocks dropped 22%, Dividend Aristocrat stocks fell less than 10%. In every major stock market correction since 1990, Dividend Aristocrats have limited downside risk by posting smaller losses than the S&P 500.

Of course, not all Dividend Aristocrats are created equal. During every bear market, there will be a handful of these stocks that underperform the broad market. These Dividend Aristocrats, many of which are trading at deep discounts to their historic valuations, offer a rare opportunity for investors to capture the compounding power of steadily rising dividends at a lower share price.

Here are 12 Dividend Aristocrats that are bargain-priced at the moment. To curate this list, we looked for stocks that are down at least 25% for the year-to-date versus the S&P 500's roughly 20% decline. A few of these stocks are trading at values as much as one-third lower than their 2021 closing price.

Data is as of July 6. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Stocks are listed in reverse order of dividend yield.

• Market value: $23.4 billion
• Dividend yield: 0.2%
• Consecutive years of dividend increases: 29

West Pharmaceutical Services (WST, $315.55) is one of the newer Dividend Aristocrats on the Street, having been added to the list in January 2021.

WST manufactures vials, syringes and other packaging components and delivery systems used for injectable medications. The company produced nearly 45 billion drug delivery devices in 2021.

West Pharmaceutical Services became a triple-digit grower during the pandemic when demand for its drug delivery devices surged. But the company has been a quiet but steady performer over longer periods. Since 2017, in fact, sales have averaged 15% annual growth, while adjusted EPS have risen 32.5%, on average, annually.

The company operates from 50 locations worldwide and has 25 manufacturing sites. It generates 45% of sales in Europe, 45% in the Americas and 10% in Asia Pacific.

A rising percentage of sales from higher value product components bodes well for WST's future earnings growth. West Pharmaceutical Services also recently introduced new packaging solutions for sensitive biologics and self-injection that help maintain its competitive edge.

Another growth catalyst could come from the company's expanded relationship with Corning (GLW). This involves a multi-million collaboration to develop new, more advanced pharmaceutical packaging solutions.

WST generated 11% organic revenue growth and 12% adjusted earnings per share (EPS) gains during the March quarter and also upped its full-year guidance. Sales in its proprietary products segment grew by double-digit amounts during the quarter, as did revenue in its biologics division.

This company has raised dividends 29 years in a row, with the most recent increase of 6% occurring in October. With payout at a meager 8% and the current dividend yield a fraction of West Pharmaceutical's fellow healthcare stocks, many investors anticipate bigger dividend hikes in the future.

WST shares earn Buy or Strong Buy ratings from four of its seven Wall Street analysts. And following the stock's nearly 33% year-to-date decline, it is now trading at 33.9 times forward earnings – a 24.5% discount to its five-year average.

• Market value: $118.6 billion
• Dividend yield: 1.0%
• Consecutive years of dividend increases: 49

S&P Global (SPGI, $349.02) is one of the big three credit rating companies, along with Moody's (MCO) and Fitch.

In addition to being a leading provider of credit ratings, related research and analytics, SPGI is the largest domestic index provider, supplying a wide variety of financial benchmarking tools, and a leading gatherer of market intelligence and analytics through its Capital IQ business unit. The company's revenue mix is 49% ratings, 14% indices and 27% market intelligence. Its Platts commodities data business accounts for the remaining 11%.

In February, S&P Global closed a $44 billion all-stock merger with IHS Markit, a leading provider of analytics to government and business customers, including 80% of the Fortune 500 companies. The merger is expected to generate $350 million of annual revenue synergies, $600 million of cost synergies, be accretive to EPS by 2023 and, perhaps most importantly, shift S&P Global's business mix to 75% recurring revenues.

Post-merger, the company was guiding for 40% revenue growth in fiscal 2022 and roughly 14% adjusted EPS gains. However, guidance was suspended in June due to weakening market conditions in S&P Global's ratings business.

The company indicated it still expects to generate $5 billion of free cash flow – the money left over after a company has covered the capital expenses needed to expand its business – this year with a targeted dividend payout ratio of 20%-30% of adjusted EPS. S&P Global also recently approved a 10% dividend hike and a $12 billion share repurchase program.

Dividends have risen 49 years in a row and 15.5% annually over five years. Payout is an ultra-low 23%, suggesting the current dividend is easily maintained.

The Dividend Aristocrat has not been immune to broad-market headwinds, with SPGI shares down 26% in 2022. It's currently trading at 1.5 times its forward PEG (price/earnings to growth), which is a nearly 21% discount to its five-year average.

Still, Barclays analyst Manav Patnaik said in June that he prefers SPGI over MCO due to cost synergies the company will realize from the IHS Markit merger and its aggressive share repurchase program. And Morgan Stanley made SPGI its top business services sector pick in May, citing the firm's widening competitive moat, leading market share and strong margins as reasons to own shares. What's more, SPGI is a top stock pick among billionaire investors.

• Market value: $63.1 billion
• Dividend yield: 1.0%
• Consecutive years of dividend increases: 43

Sherwin-Williams (SHW, $242.74) is the industry leader in paints, coating and related products. Its familiar brands include Valspar, Dutch Boy, HGTV, Krylon, Minwax and many others.

The company operates across three business segments: The Americas Group owns more than 4,800 specialty stores mainly across North America, catering to contractors and DIY customers; The Consumer Brands Group handles product manufacturing, development and distribution; and The Performance Coatings Group specializes in industrial coatings for wood finishing, automotive and marine applications.

SHW expanded its presence in coatings for heavy equipment this year via the acquisition of Gross & Perthun, a German company that generates approximately $50 million in annual sales. The deal is expected to close during the September quarter.

Sherwin-Williams has been a reliable performer that has generated average annual growth of 11% in sales and 10% in EPS over the last five years.

While sales in the company's March quarter rose 7.4% – fueled by strong demand in the performance coatings group – adjusted EPS dropped 21.8% due to raw material cost inflation that was only partly offset by price increases.

For all of 2022, Sherwin-Williams is guiding for high-single-digit to low double-digit sales growth and adjusted EPS ranging from $9.25-$9.65. This will mark a 16% increase over last year's results, when supply-chain disruptions dampened earnings.

Credit Suisse analyst John Roberts downgraded the materials stock – which is off 31% for the year-to-date – to Underweight (Sell) in May, citing his expectations that demand for paint would drop as interest rates rise. However, Morgan Stanley strategists recently recommended SHW shares on their list of stocks thought to be insulated from recession risk and likely to revise EPS upward going into 2023.

Sherwin-Williams has increased dividends 43 years in a row, including a 9% hike in February. The five-year annual dividend growth rate is even better, at 15%. Plus, payout is less than 30%, which suggests no difficulty maintaining the higher dividend even if EPS softens in 2022.

• Market value: $17.6 billion
• Dividend yield: 1.6%
• Consecutive years of dividend increases: 66

Dover (DOV, $122.08) is a diversified industrial manufacturer and technical solutions provider generating $8 billion in annual revenues. The company delivers equipment and components, as well as software and digital solutions through five operating segments. These include engineered products, clean energy and fueling, imaging and identification, pumps and process solutions, and climate and sustainability technologies.

Reflecting the benefits of its diversified business mix, Dover has delivered 4% annual organic revenue growth, 16% annual adjusted EPS gains and 13% yearly rises in free cash flow growth over four years. Even more impressive is DOV's dividend track record showing 66 consecutive years of payout increases, which makes it one of the best Dividend Aristocrats out there.

Dover supplements organic growth with acquisitions that expand its footprint and accelerate its top and bottom lines. The company's latest acquisition is of Malema Engineering, a manufacturer of flow measurement instruments serving customers in the biopharma, semiconductor and industrial markets. The deal is expected to add $45 million to Dover's annual sales and will greatly expand its biopharma product offerings.

In the March quarter, Dover grew sales 10% and adjusted EPS by 5%, beating analysts' consensus estimates. The company is guiding for 8%-10% revenue growth and a roughly 12% increase in adjusted EPS this year.

Analysts are upbeat toward the industrial stock, too. In April, Goldman Sachs recommended DOV on its list of companies having the best pricing power. According to David Kostin, chief U.S. equity strategist, pricing power becomes critical in times of inflation by enabling companies to maintain strong margins.

Dover shares are down 33% year-to-date and were recently valued at 14.3 times forward earnings – a 25.5% discount to the stock's five-year average. And dividend growth is respectable at 7% annually over five years, while payout appears easily sustainable at a modest 25.8%.

• Market value: $7.8 billion
• Dividend yield: 1.8%
• Consecutive years of dividend increases: 46

Pentair (PNR, $46.90) is a leading provider of water treatment solutions including filtration products, pressure tanks, control valves, pool equipment and accessories and other products to residential and commercial customers. The company generated $3.8 billion of sales last year and has operations in 30 countries.

Secular trends benefiting the company's pool business include population migration trends favoring warmer climates, a large installed base and a movement toward more energy efficient pools.

The company also derives approximately 70% of pool-related revenues from replacement and aftermarket business, which gives stability to this segment. Pentair's water treatment business is benefitting from new connected digital technologies and a post-COVID recovery in industrial and food service demand.

PNR has increased its dividend 46 years in a row and generated 15% annual dividend growth over the past three years. It also holds an ultra-safe dividend payout of 24%.

Pentair is an impressive generator of free cash flow, too, which typically matches or exceeds net income. The company aims to return 50% of free cash flow to investors each year via dividends and share repurchases.

In the March quarter, PNR's sales rose 15% and adjusted EPS grew 5%, fueled by double-digit growth in its water treatment, industrial solutions and pool businesses. The company is guiding for 2022 sales that are 9%-11% higher on a year-over-year basis and adjusted EPS gains of 9% to 12%.

Helping the company's growth will be its recently agreed upon acquisition of Manitowoc Ice, a leading North American designer and manufacturer of ice machines. This acquisition meaningfully expands PNR's water solutions platform, accelerates its buildout in the hospitality, food service and grocery markets, and is expected to add around 65 cents per share to adjusted earnings over the next three years.

PNR shares have declined 36% this year. They are currently trading at a lowly 12.6 times forward earnings, which is a 32.2% discount to Pentair's historic average multiple.

• Market value: $9.0 billion
• Dividend yield: 1.9%
• Consecutive years of dividend increases: 29

A.O. Smith (AOS, $57.96) offers investors a nearly 30-year track record of rising dividends and an impressive 20% annual dividend growth rate over 10 years.

This company is America's largest manufacturer and marketer of water heaters, boilers and water treatment products. And it holds a leading share of both the residential and commercial water heater markets.

In addition, AOS is an important player in China, with 5,800 retail outlets across China's Tier 1 and Tier 2 cities. Meanwhile, approximately 75% of the company's sales are in North America and made through a network of 1,100 independent plumbing distributors.

A.O. Smith delivered excellent March quarter results, with sales up 27% year-over-year and adjusted EPS up 31%. The company is guiding for 14%-16% sales growth and 17% adjusted EPS gains at the midpoint this year.

A significant recurring replacement cycle (80%-85% of water heater and boiler sales are replacement units) ensures AOS can continue to generate steady results even during recessions. Water heaters and boilers are essential items that must be replaced regardless of rising interest rates or a slowing economy.

Baird analyst Michael Halloran noted in late January that water sector stocks were being pummeled in 2022. He made AOS his top pick in the water group while recognizing it as one of his best ideas across his coverage list.

As for its place on this list of discounted Dividend Aristocrats, AOS shares are down 32.5% year-to-date to trade at 16.4 times forward earnings. This is a 29.2% discount to the company's five-year average forward P/E multiple.

• Market value: $28.2 billion
• Dividend yield: 2.0%
• Consecutive years of dividend increases: 50

PPG Industries (PPG, $119.40) is the world's second largest manufacturer of paints, coatings and specialty materials behind Sherwin-Williams. PPG's principal markets include paints for automotive OEMs (original equipment manufacturer) and refinishing, architectural, aerospace, protective and marine and industrial applications.

The company's sales rose 11% year-over-year during the March quarter, supported by price increases and a continued recovery in COVID-impacted end-markets like automotive refinishing and architectural coatings. However, adjusted EPS came in 27% lower than the year prior due primarily to increased raw material costs and the continued impact of COVID-related supply-chain disruptions.

Despite the company delivering better-than-expected March quarter results, Berenberg analysts downgraded PPG shares to Hold in late May. They cited rising raw material costs and a heavy reliance on a recovery in automotive OEM production as reasons for the downgrade.

However, other analysts think there are plenty of catalysts that could buoy 2022 results. One such catalyst is in the electric vehicle (EV) market where new coatings and sealants that reduce battery fire risk may represent an additional $200 per vehicle opportunity – roughly double what it is for traditional coatings.

Another opportunity comes from new powder coatings that perform like traditional coatings but emit no harmful VOCs (volatile organic compounds). A third catalyst is PPG's recently expanded relationship with Home Depot (HD). This makes the company's paints for professional contractors available at all Home Depot stores.

Analyst downgrades have contributed to a 31% decline in PPG shares this year. As a result, the stock is among the deeply discounted Dividend Aristocrats – trading at 17 times forward earnings and a more than 13% discount to its historic multiple.

What's more, PPG has generated 50 years of rising dividends, including 8% annual dividend increases over the past five years. And a modest 37% payout should keep this dividend safe, even if EPS growth proves challenging this year.

• Market value: $114.4 billion
• Dividend yield: 2.4%
• Consecutive years of dividend increases: 48

Lowe's (LOW, $179.06) operates nearly 2,000 home improvement stores across the U.S. and Canada, serving approximately 19 million customers per week.

Compared to its principal competitor Home Depot, Lowe's is more focused on the professional contractor segment. This group typically makes significantly larger purchases per transaction than DIY customers and are thus a more lucrative business segment that can support higher margins. These contractors represent only about 25% of LOW's sales at present, but the company is rolling out new brands and products as well as cloud-based design tools targeting the professional contractor segment.

Lowe's April quarter sales came in 3% lower than last year and comparable store sales fell 4%. Still, earnings per share rose 9% as a result of margin improvements and share repurchases. The company is guiding for comparable store sales to be roughly flat in fiscal 2022, while EPS will arrive between $13.10 and $13.60, up 11% compared to last year. Some of 2022's EPS gains will come from $12 billion of share repurchases that LOW's expects to complete this year.

Signaling the strength of its cash flows, Lowe's hiked its cash payout by 31% in May, marking the 48th consecutive year of dividend growth. The retailer's low 26% payout ratio provides great flexibility for share repurchases, dividend hikes and investments to drive business growth.

Lowe's was trading at 52-week lows in June amid expectations that rising interest rates would dampen housing demand. While the shares have come off this bottom, they are still down nearly 31% for the year-to-date.

However, Wells Fargo analyst Zachary Fadem recently reiterated an Overweight (Buy) rating on LOW, saying the stock could be a defensive play if there is recession.

• Market value: $16.7 billion
• Dividend yield: 3.0%
• Consecutive years of dividend increases: 54

With revenues last year exceeding $15.6 billion, Stanley Black & Decker (SWK, $110.91) ranks as the global leader in outdoor power equipment and power tools, hand tools and engineered fasteners. The company has built its worldwide franchise around well-known brand names like DeWalt, Craftsman, Lenox and Troy-Bilt, along with its familiar Stanley and Black & Decker brands.

The company aims to deliver 10%-12% annual sales and EPS growth over the long term via a strategy of promoting higher-growth, higher-margin businesses, making acquisitions and expanding in emerging markets. The successful implementation of these strategies has already resulted in EPS gains averaging nearly 25% annually over the past three years.

In its March quarter, SWK grew revenues 20% and adjusted EPS came in well above analysts' consensus estimate. The company is guiding for mid-20% revenue growth in 2022 and free cash flow ranging from $1.0 billion to $1.5 billion. However, the company recently cut its EPS forecast due to closing its Russia business and divesting its automatic door business. Shares fell in response to the reduced EPS guidance.

Stanley Black & Decker typically allocates half of its free cash flow for acquisitions and returns the other half to investors via dividends and share repurchases. So far in 2022, the company has spent $2.3 billion on stock buybacks that have reduced the number of shares outstanding by nearly 8%. The company is as steady as Dividend Aristocrats go, having grown dividends 54 years in a row while maintaining a low 30% payout.

Baird analyst Timothy Wojs reiterated his Outperform (Buy) rating on SWK shares in June. He anticipates the company's plan to reallocate $250 million to shore up supply chains will create $1 billion of additional value over the next five years. Wojs also cited the company's Flexvolt product line and DeWalt Powerstack battery platform as key growth catalysts.

• Market value: $67.1 billion
• Dividend yield: 3.0%
• Consecutive years of dividend increases: 51

Big-box discount merchandiser Target (TGT, $144.81) is the eighth largest retailer in the U.S. and owns more than 1,900 stores across all 50 states and Washington, D.C. It is estimated that 75% of the U.S. population lives within 10 miles of a Target store.

Target sells groceries, apparel, household goods and electronics. During the pandemic, TGT was a top stock as Americans flocked to big-box stores to load up on food and household essentials.

After a similarly strong financial 2021 performance, Target encountered headwinds this year due to overestimating the strength of consumer demand. This left the company with excess inventories of goods that it is now liquidating at a discount.

TGT shares plummeted in May as a result of March quarter adjusted EPS that widely missed estimates and a reduction in 2022 guidance. They are now down 37% for the year-to-date. Plus, the stock is trading at 12 times earnings, which is a 30.5% discount to its five-year average.

The company now expects 2022 revenue growth in the low- to mid-single digit range and operating margins ranging around just 2% in the June quarter due to inventory selling. However, Target anticipates margins rising to 6% in the second half of 2022.

Despite current headwinds, TGT offers a solid long-term performance showing 20% annual EPS growth over five years and nearly 11% growth over 10 years. Like several of the Dividend Aristocrats featured here, the company is also a Dividend King. And in June, it rewarded investors with its 51st consecutive year of hiking dividends, increasing its cash payout by 20%.

With payout set at an exceptionally modest 28%, it seems likely that TGT can continue growing its dividend even if the retail environment softens in the near term.

While BofA Global Research analyst Robert Ohmes recently downgraded shares to Neutral (Hold) due to recession fears, Barclays analyst Karen Short maintained an Overweight (Buy) rating, calling TGT a best-in-class retailer.

• Market value: $26.6 billion
• Dividend yield: 4.1%
• Consecutive years of dividend increases: 36

Asset managers like T. Rowe Price Group (TROW, $116.82) have taken an outsized pounding during this year's bear market, but this high-quality mutual fund giant has compiled a solid track record of outperforming its industry peers.

Over the past five years, 68% of T. Rowe Price funds have outperformed competitor funds and 79% have outperformed over a 10-year time frame. This led to TROW being named the best overall large U.S. fund manager by Refinitiv Lipper in 2022.

T. Rowe Price provides a broad array of actively managed mutual funds, advisory services and account management for individual and institutional investors and retirement plans. Since its funds are actively managed, TROW may gain a competitive advantage from investors switching from passive to more defensive actively managed funds during a prolonged bear market.

The firm's assets under management totaled $1.4 trillion in May, down from $1.7 trillion at the beginning of the year. Still, this is large enough to rank T. Rowe Price as a top 20 global asset manager.

The company's net revenues rose 2% year-over-year during the March quarter, but EPS declined 24% as a result of client outflows from funds and the company's decision to waive money market advisory fees in order to maintain positive yields for its investors.

As far as Dividend Aristocrats go, the long-term financial performance of this one has been stellar, with EPS rising an average of 19% annually over five years and 15% over 10 years. And this has been accompanied by 36 consecutive years of rising dividends. Dividend growth has averaged more than 15% annually over five years, and the firm's low 36% payout provides a safety margin if earnings decline in 2022.

The financial stock has rarely been this affordable, recently trading at 11 times forward earnings – a nearly 23% discount to the its average historic multiple. In addition, shares currently yield a rich 4.1% yield, which is nearly twice their five-year average yield.

Analysts are upbeat toward the stock, too. In May, Goldman Sachs highlighted TROW as one of its top picks for high dividend growth and yield in the financial sector.

• Market value: $17.4 billion
• Dividend yield: 4.5%
• Consecutive years of dividend increases: 49

V.F. Corp (VFC, $44.70) is a global leader in branded apparel and footwear. Its iconic Timberland, North Face and Vans brands comprise almost 80% of total sales.

Fears of a looming recession that will erode consumer spending have hurt VFC shares this year, with the stock down almost 40% so far in 2022. This is in spite of the resiliency V.F. Corp demonstrated during its most recent quarter ending in April.

Over the three-month period, the apparel manufacturer saw sales improve 12% over the year-ago period, led by a 26% gain for its North Face brand. Even better, significant improvement in the company's operating margins drove a 32% increase in EPS.

Fiscal 2022 results were also impressive with sales rising 28% year-over-year and adjusted EPS up 143%.

Management is guiding for 7% revenue gains and 10% EPS growth in fiscal 2023. This growth is expected to come primarily from emerging brands such as Icebreaker, which brought in record revenue in VFC's fiscal 2022, and Smartwool, which produced 40% sales growth last year.

VFC has delivered 49 consecutive years of dividend growth, averaging 5% annual hikes over the past five years. Share price weakness in 2022 has made VFC one of the most deeply discounted Dividend Aristocrats – and pushed the retail stock's dividend yield up to 4.5%, which is roughly twice its five-year average yield. The company also offers a secure 64% payout ratio and A-rated balance sheet.

In May, Credit Suisse strategist Jonathan Golub recommended VFC on a list of his top 25 stocks that have declined more than the market while improving their EPS this year.

The partial U.S. government shutdown is now into its fourth week, making it the longest-ever political standoff of its kind.

While critical functions such as defense and mail delivery still are operating, other less-vital units have been mothballed, including several national parks and many Washington, D.C., monuments. A handful of agencies are somewhere in between, furloughing some nonessential workers while keeping essential ones at work to maintain the absolutely necessary aspects of their service.

The ripple effect of the shutdown, however, has extended well beyond the circle of government employees and agencies. While government shutdowns typically don't hamper the stock market, a few publicly traded stocks and privately owned companies are starting to feel the pinch. These firms either provide contracted services and goods for the government, or cater to government employees who (for now) aren't receiving a paycheck.

Here are seven companies that have been (or that analysts think could be) adversely impacted by the shutdown.

Data is as of Jan. 15, 2019.

Most arms of the federal government outsource their heaviest technological needs. The U.S. intelligence community, for instance, uses Microsoft’s (MSFT) Office 365 for US Government. The CIA has tapped Amazon.com’s (AMZN) Amazon Web Services unit to build a private cloud. International Business Machines (IBM) soon-to-be-subsidiary Red Hat (RHT) has been one of the few outfits to divulge how much of its revenue comes from government customers (10% for the past three years).

Exactly how the government shutdown could crimp technology-company earnings isn’t perfectly clear. Even when the nature of these products isn’t classified, most firms still aren’t forthcoming. But Oracle (ORCL, $48.38) CEO Mark Hurd at least acknowledged in a recent interview, “There is ongoing government contracts, ongoing government business, frankly ongoing government projects that in some cases take a pause with all this, so that certainly is an issue.”

Morgan Stanley believes 15% of the company’s sales are driven by federal government customers. Oracle has neither confirmed nor denied the estimate. Even if some of those sales are being made and paid-for, at least some piece of Oracle’s top line might be in jeopardy.

The timing of the shutdown is unfortunate for Oracle, too. The company’s fiscal third quarter began in early December and won’t end until the end of February, putting the span of the shutdown entirely within the quarter. Even if it ends soon, government spending might not reach full speed again until Oracle’s fiscal Q4.

Several of the air travel industry’s shutdown-related issues are well-known at this point. Unpaid Transportation Security Administration (TSA) workers are calling in sick, leaving airports with longer security lines; air-traffic controllers are working without pay, but the longer this goes, the more industry workers could seek out different employment.

• Delta Air Lines (DAL, $47.83) is facing its own headaches, and it’s not the aforementioned logistical issues. Instead, it’s the fact that government employees do a lot of flying.

“We’re seeing a reduction in revenues in January,” says Delta CEO Ed Bastian, who said the losses are “not huge,” but still offers a specific number: “about $25 million due to the fact that government contractors and some government officials are not traveling the way they would anticipate because of the shutdown.”

And while some workers will be paid for their hours once the shutdown ends, Delta can’t exactly go back in time and retroactively earn that business.

That’s not the only sales hit that Delta and its peers face. Indirectly, airlines can’t put new planes into service because they require safety inspections from government employees who currently aren’t working. Delta had planned to put brand-new Airbus (EADSY) A220 jets into service on Jan. 31, but unless the shutdown ends in time, that can’t happen. A330-900neos also could be affected.

One last consideration; New routes also must be approved by regulators that are presently furloughed. However, it’s not clear whether Delta has been forced to postpone the development of any new flights.

It’s arguably more bark than bite, but Columbia Sportswear (COLM, $82.73) reports it’s also on the wrong end of this political stalemate. That’s because campers and outdoor enthusiasts from coast to coast are locked out of the country’s currently closed national parks.

“We would expect that people who want to go outdoors need apparel and need footwear to enjoy the outdoors and we expect that over time this will definitely have an impact,” said Columbia Sportswear CEO Tim Boyle, who did not cite any specifics about the shutdown’s impact. Boyle was specific in his blame though, pointing the finger at both parties. “We want both sides to come together to get this solved and get parks open again,” he said.

Ashford, Washington-based sporting goods company Recreational Equipment, Inc. (better known as REI) delivered a response to the government shutdown, too – not about the impact to its own business, but others. In addition to describing the toll being taken on national parks, REI says, “On an average day in January, 425,000 park visitors spend $20 million in gateway communities across the U.S.,” citing numbers from the National Parks Conservation Association’s government affairs team.

Neither Uber nor Lyft are publicly traded – yet. However, both ride-hailing services could find their initial public offerings postponed. The Securities and Exchange Commission still is monitoring markets, but workers that would review and respond to registration filings aren’t being allowed back to their desks yet. This may or may not impact the Lyft or Uber IPOs; it’s largely a matter of timing.

Both companies have confirmed they’ve submitted the initial paperwork required to take their respective organizations public. But that’s only the first step in what could be a lengthy process as SEC officials review these documents and request more information as needed. It can take months for some companies to finalize their filings and get the SEC green light for a public offering.

Renaissance Capital principal Kathleen Smith is concerned in that regard, telling MarketWatch, “As the government shutdown continues into 2019, a backlog is building that will delay the IPO process for companies of all sizes, including the large tech deals such as Uber, Lyft, Slack, Pinterest, etc., that are on file confidentially.”

Timothy Kviz, BDO’s national assurance managing partner for SEC services, added that he worries much of the idle IPO paperwork will have “gone stale” by the time regulators review it. That would force those organizations to start over on an updated submission.

The United States’ Armed Forces personnel still are on the job. Defense contractors still are doing development work, too, as most major projects were planned and started well before the government shutdown began. However, some individual contractors that do day-to-day service work in areas such as IT support and consulting aren’t working and aren’t being paid.

The matter leaves some companies in a lurch.

For larger players such as $77 billion Lockheed Martin (LMT) or $48 billion General Dynamics (GD), it’s not much of a hardship because much of the work they are doing is deemed important enough to continue doing. And in cases where it's not, those companies have plenty of liquidity to continue paying personnel. But the situation might be more difficult to navigate for smaller companies such as $2.7 billion Science Applications International (SAIC, $63.29).

Specifically, SAIC has to spend $10 million per week to keep those staffers paid, even though the federal government isn’t reimbursing the company for that work Making matters worse, Science Applications says the government is now as much as $50 million behind in its payments due the company.

SAIC might be harder-hit, but it’s hardly alone. Bloomberg estimates an average of $200 million worth of contracted business per day is not being awarded to anyone in the industry during the shutdown.

If anything, temporarily out-of-work government employees might have more time to spend watching television, slightly bolstering ratings for CBS (CBS, $47.80) in an environment that otherwise shouldn’t impact the entertainment industry. But there’s one nuance to the timing of the shutdown that has a small chance of being problematic.

CBS has the honor of airing this year’s Super Bowl, scheduled for Sunday, Feb. 3. Granted, it paid for the honor, but selling 30 seconds worth of ad time at more than $5 million a pop makes it a worthwhile investment. Indeed, for some viewers, the commercials themselves are the more entertaining aspect of the Super Bowl.

However, it’s possible that some of the game’s would-be advertisers won’t be able to run the ads they were hoping would introduce new products with a splash.

Consumer technology companies are vulnerable to this possibility. The FCC must approve any new product before it can be in the United States, but this arm of the FCC isn’t operating right now. No tech outfit has yet reported a cancellation of plans to unveil a new device during the Super Bowl, but newly launched 5G services and smartphones would have benefitted from the kind of exposure only the big game can provide.

Beer companies are in the same spot. Any alcoholic beverage company looking to launch a new product ahead of the game hasn’t been able to win the Alcohol and Tobacco Tax and Trade Bureau’s approval, as the department has been shuttered since late December. Those industries are traditionally key buyers of Super Bowl ad time.

To be clear: The potential pain (however minimal) to CBS is currently just speculative, with no reports that anyone has yet canceled an ad for these reasons. At this moment, it is merely a possibility.

The current decade may end up being remembered as the “Cloud Decade.”

The cloud is essentially a massive infrastructure of computers around the world that are used to power processes more efficiently and store a far greater amount of information than one mere computer can. The data centers that power the cloud are sprawling structures with computer and networking gear. They are capable of handling enormous workloads, but they also need enormous workloads to be run profitably and lift the tech stocks supporting them.

Many of the companies that are dominating the cloud at present bet on building the cloud early, and in many cases wagered most if not everything they had. It was too rich an investment at the time for giant firms such as AT&T (T) and International Business Machines (IBM), which were more focused on today’s profits and dividends than tomorrow’s dividends. But some of those that made the bet were richly rewarded – American capitalism at its finest. These tech stocks, considered “cloud czars,” represent more than $3.5 trillion in market value today.

But “czars” aren’t the only companies making money off the cloud. There are numerous cloud users that haven’t developed infrastructure, but still have manipulated the technology to its full potential. These software and content companies still made a gamble, though, committing to putting all their assets in the cloud and selling services rather than products. Now, they dominate many markets.

Tech stocks involved on both sides of the cloud still hold enormous potential. Whether it’s “czars” that control the infrastructure, or “users” that take advantage of the cloud’s low-cost economics and enormous reach, each of these 10 stocks may continue to change the tech landscape in the years ahead – and enrich shareholders in the process.

Data is as of March 28, 2018. Click on ticker-symbol links in each slide for current share prices and more.

• Market value: $721.8 billion
• Alphabet (GOOGL, $1,005.18), parent of the Google search engine, didn’t invent the cloud. It was merely the first to see the need to combine virtual operating systems in which any program can run; distributed computing that could share a program load among many machines; and massive scale, based on open-source software and cheap hardware, to run its business.

These three ideas – scaled to the largest possible degree, and connected by fast fiber-optic cables – make up the cloud.

Alphabet now has a network of 15 cloud data centers; nine in the U.S., and the rest spread among countries including Chile, Finland and China.

Google put more than $13 billion into capital spending during 2017, including $4.3 billion alone in the fourth quarter, to support a business with revenues of over $110 billion in 2017. Most of that comes from advertising on Google services, but it also includes Google Cloud, which resells this cloud capacity as infrastructure, platforms and applications.

Google only got serious about reselling its cloud in 2015, under Diane Greene, a co-founder of VMware (VMW), which developed much of the virtual machine technology on which clouds are based. The bulk of Google’s capacity still is used to run its advertising-supported search business, which netted $73.7 billion last year after costs for buying traffic. In fact, in 2017, digital ad spending outpaced that of TV, at $209 billion worldwide.

Google may be the ultimate cloud play. It is in every area of cloud – hardware, software, services, commerce and resale. The recent court decision saying it violated Oracle’s (ORCL) Java copyright in writing Android will hurt the stock, but the company remains strong.

• Market value: $686.8 billion

No company is more closely associated with the cloud than Amazon.com (AMZN, $1,431.42), which was founded as an Internet bookseller in 1994.

To Amazon, the cloud is just one type of e-commerce infrastructure, like warehouses, delivery trucks, transaction processing or calculating sales tax. It uses all these things to run its own e-commerce business, then resells the same capabilities to other companies.

But by being the first to resell its cloud infrastructure as a service, under the name Amazon Web Services, and by investing in it ahead of demand, Amazon has built the world’s largest cloud, with 54 “Availability Zones” across 18 geographic regions on five continents. Four more regions are planned: in Bahrain, Hong Kong, Sweden and an additional U.S. location.

Amazon only began breaking out cloud revenues a few years ago, but its excellent profitability compared to is low-margin e-commerce operations has helped power AMZN shares’ gains ever since. In 2017, AWS brought in $17.46 billion, with $1.35 billion of it profit. Amazon has almost half the public cloud market, and analysts say it’s in “a league of its own” within that market.

In the process, founder Jeff Bezos – who still owns 16% of the company’s stock – has become the world’s wealthiest man, possessing a fortune worth as much as $130 billion in March 2018.

• Market value: $859.4 billion
• Apple (AAPL, $166.48), whose iPhone devices are among most profitable consumer products ever, was late to the cloud. However, its sheer size allowed it to catch up quickly.

Apple built its first large data center in Prineville, Oregon, in 2007, then built what remains its largest such center in Maiden, North Carolina, starting in 2009. Both are currently being expanded. The company has two other data centers, in California and Nevada.

CEO Tim Cook has committed to building new cloud capacity across the world. This business has kept Apple growing through 2018. Services revenue, under which its cloud operations fall, came to almost $30 billion in fiscal 2017, and it’s the fastest-growing part of the company. Apple now gets more revenue from the iCloud and other services such as the App Store and iTunes – delivered via the Apple Cloud – than from its Mac computers.

Apple’s capital expenditures budget in 2018 is $16 billion, and while some of that money is going into new retail stores, most is going into data centers.

• Market value: $461.3 billion

Perhaps no company took more cloud risks, earlier in its corporate evolution, than Facebook (FB, $153.03) – founded in 2004 in a Harvard dorm room.

CEO Mark Zuckerberg opened Facebook’s first data center in Oregon in 2011, a year in which revenues came to $3.81 billion. It can take $1 billion of capital spending each quarter to compete in the cloud game – a commitment that dissuaded such giant firms as AT&T and IBM from building out cloud until the market had left them behind. Facebook committed to the cloud when the investment represented more than 100% of revenue.

That commitment continues today. The company has pledged $15 billion in capital spending for 2018. Facebook presently has four data centers, and is building four more, including one near Atlanta.

Facebook delivers all its services via its cloud, and all those services depend on advertising. It doesn’t resell cloud capacity as Google and Amazon do. It is not a product company like Apple. It doesn’t even charge users money. It is totally dependent on advertising to support its capital expenditures on cloud.

Facebook also is the biggest gambler among the cloud czars. And gambling carries risk. FB shares have fallen more than 15% after mid-March revelations that a third party, Cambridge Analytica, shared users’ data without their direct consent or knowledge.

• Market value: $690.4 billion

Amazon’s chief rival in selling cloud services isn’t Google, but Microsoft (MSFT, $89.30).

While Amazon runs its own businesses on the cloud, and began selling cloud capacity a decade ago, Microsoft has only been completely committed to cloud infrastructure since Satya Nadella became CEO in 2014.

Matthew Ball, principal analyst with the technology analysis firm Canalys in England, says Microsoft – whose cloud computing service is dubbed “Azure” – acted under pressure from Google and Amazon. “Google is offering the G Suite of productivity tools against Microsoft Office. Microsoft saw their customers needing the infrastructure to sell their own server-side software (like SQL Server).”

Microsoft now claims to have 50 Azure “regions,” although a single data center can have more than one region. It is building two data centers in the Middle East (Abu Dhabi and Dubai), and is opening two in Africa (Johannesburg and Cape Town, South Africa) this year.

By putting all its resources on the cloud – not just Windows and Office, but all its offerings – and by reselling its capacity at competitive rates, Microsoft has become a growth company again. In fact, it is on pace to achieve $100 billion in revenue for the first time during the current fiscal year. Even better, it sports robust operating margins averaging around 25%, and turned $28.9 billion of revenue into $8.7 billion in profits during the most recent quarter.

• Market value: $105.9 billion
• Adobe Systems (ADBE, $212.54) is an old-line company by the standards of Silicon Valley.

It was founded in 1982 around PostScript, which created computerized typefaces for desktop publishing. Adobe created Photoshop for editing images in 1988, created the PDF format in 1993, then bought its main rival in video editing, Macromedia, in 2005.

But by committing to the cloud, Adobe stock is up more than 400% in just five years. Since 2013, revenues have doubled, and profit margins have exploded from just 5% of revenue to nearly 25%.

Credit Shantanu Narayen, who became CEO in 2007. Photoshop, once sold in boxes, is now offered exclusively online. It is among the publishing tools that are in the Document Cloud. Design software is sold as the Creative Cloud. After launching the Creative Cloud in 2013, Adobe also created the Experience Cloud, which helps create both online and offline marketing campaigns whose results can be measured in real-time.

Adobe holds its own costs down, meanwhile, by offering services on both the Amazon and Microsoft clouds.

• Market value: $28.0 billion

It is better to move to the cloud late than never. Autodesk (ADSK, $124.55), which like Adobe was founded in 1982, has risen in value by nearly 230% in the past five years as it has committed itself to the cloud and selling software-as-a-service.

Under founder John Walker, Autodesk eventually became known for its computer-aided design software, AutoCAD. After a succession of acquisitions, it went through a long period of control by hedge funds before chief marketing officer Andrew Anognost, who became CEO in 2017, led it toward a commitment to cloud and subscription-based pricing. Autodesk’s first subscription offering was Business Information Modeling (BIM), which includes designing, construction planning and management of buildings.

The pivot to the cloud was painful, accompanied by layoffs reducing employment by 1,150 positions. But by the end of 2017, Autodesk had returned to growth, with revenues growing by 16% year-over-year. Losses were substantially reduced, and ADSK shares took off.

• Market value: $123.7 billion

No company represents the cloud user trend better than Netflix (NFLX, $285.77), and few have been more successful with it. The cloud has given Netflix investors a gain of more than 1,100% in just five years.

Netflix was founded in 1997 on the idea of mailing DVDs containing movies and TV shows to subscribers, then accepting them back by mail, for a monthly fee. It was founder Reed Hastings’ decision to move his business to the cloud, then expand into original content, however, that really set NFLX on fire.

Netflix’s commitment to the cloud goes beyond simply putting movies online, however. The company also analyzes traffic to decide what to offer viewers, and what shows to buy. And past that, Netflix even created a system called Open Connect to reduce the costs of delivering traffic over the “last mile” of the Internet to consumers.

Netflix is also fully committed to its model. Rather than just take profits on its early-decade success, Netflix has pushed its borrowings to $6.5 billion at the end of 2017, signing exclusive contracts with top producers and even enticing former President Barack Obama into talks about possibly producing shows.

Netflix, which was once compared to cable channel HBO, is now worth well more than HBO’s parent company Time Warner (TWX).

• Market value: $26.3 billion

One of the most important ingredients in the cloud may be open-source software. Open-source software lets companies share their development costs, putting every competitor on a high (and rising) platform of code.

No company is as important to this open source movement as Red Hat (RHT, $146.20), whose stock has more than tripled since 2013.

Red Hat makes money from open-source software by offering two versions of the Linux operating system. The paid version, Red Hat Enterprise Linux, includes support. The free version is called Fedora Linux.

Support, it turns out, is a very good business model.

The stock didn’t really take off until CEO Jim Whitehurst, who came to the company from Delta Air Lines (DAL), launched OpenShift in 2011. Originally designed as a program for adapting its Red Hat Enterprise Linux and JBoss middleware for use in clouds, OpenShift has evolved into a “container management” system, loading software into clouds as self-contained “containers” so they can be managed easily, the way trains and ships move goods using containers.

Since 2013, Red Hat’s revenues have doubled while its profit margins have held steady at over 10% of revenues.

• Market value: $83.6 billion

One of the earliest promises of the Internet was that it could deliver software as a service. No company represents the success of this more than Salesforce.com (CRM, $112.88). CRM stock is up roughly 175% during the past five years. If that sounds small, understand that Salesforce already was worth nearly $30 billion in March 2013 and was about to split its stock 4-for-1. The stock has gained 585% in the past decade.

Salesforce was founded in 1999 by a former Oracle executive, Marc Benioff, and started with Customer Relationship Management software (hence the ticker symbol CRM). The software, which was based on Oracle databases, tells marketers all they need to know about every customer, either when they walk in the door, online or offline, or in the aggregate, allowing for better strategies.

Over the years, Salesforce has expanded into other database-based applications, including human resources, performance management and workflow. It also sells others’ software through its AppExchange marketplace.

In March 2016, Salesforce announced it would buy Mulesoft for $6.6 billion, allowing it to help enterprises build “hybrid” clouds, where key data is kept on the company’s premises instead of cloud data centers.

Steve Koenig, Managing Director of Wedbush Securities, rates Salesforce an “Outperform” (equivalent of Buy). Companies of all sizes are being forced to digitize and engage across both online and offline distribution channels, and Salesforce is “the best-positioned vendor to capitalize on these trends,” he writes. Moreover, at less than 6 times estimated 2019 revenues, shares “look like a bargain” compared to its peers, Koenig says.