The 7 Best Dow Stocks to Buy as America’s GDP Growth Soars

And analysts are trained to remain disinterested in share prices, as you’ll quickly find if you ever meet one at a cocktail party. The Dow Jones Industrial Average, also known as Dow Jones or Dow, is one of the oldest and most followed equity indexes of the United States stock market. It was founded more than a century ago in 1896 by Charles Dow, the editor of the Wall Street Journal at the time. Originally, the Dow comprised just twelve companies that were commodity-focused. It is a price-weighted index, unlike other market indexes which weigh businesses on their market capitalizations of businesses. Income investors have a lot to like about Verizon, too, with a dividend yield that currently stands at 7.1%.

Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing. In this article, we discuss the 15 best Dow stocks to buy now. If you want to skip our detailed analysis of these stocks, go directly to 5 Best Dow Stocks To Buy Now. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Finally, this ETF isn’t particularly expensive, boasting an expense ratio of 0.16%. This tends to work in long-term investors’ favor, since they get to keep the lion’s share of their gains while keeping costs low.

  1. Even if you fade these cash flows down to $3 billion by 2040, the company’s fair value still comes in at $124.4, a 14.2% upside.
  2. After all, its stock now trades at a forward earnings multiple of 33, which reflects a premium valuation.
  3. Towards the end of the year, in December, the index reached a record-breaking high, surpassing the $37,000 mark.
  4. There are clear winners — and losers — at the start of February.
  5. Yet, these scorecards are often poor predictors of future performance.
  6. That dividend yields 4%, which is within the healthy range but also relatively high at the same time.

That means it basically grows along with the overall increase in Internet connectivity. Based on current projections, the company’s top-line growth isn’t expected to be particularly impressive and doesn’t stick out. However, Cisco Systems is amongst the leaders in its business. The company will continue to grow with the secular increases in technology.

Apple (AAPL)

However, Apple continues investing in growth while returning capital to shareholders. The company and its stock tend to thrive across all business cycle periods. It’s safe, continues to grow rapidly, and provides an ultra-dependable dividend for income investors in particular.

Honeywell now sees revenues of between $34 billion and $34.8 billion in 2021, along with organic sales growth of 5% and adjusted earnings of $7.75 to $8 per share. This would be a 15 cents per share increase from its previous full-year guidance. The strong results and outlook have been driven by sales of Honeywell’s “safety and productivity solutions,” which jumped nearly 50% to $2.1 billion in the first quarter. And now is a great time to buy shares of the venerable Atlanta-based company that has been a going concern since 1892. With restaurants reopening for in-person dining and live sports, concerts and other events set to return, sales of Coca-Cola are expected to improve this year. In the first quarter, the company saw its consumer banking revenue increase 32% to $371 million.

It’s a play on AI without the risks that come with investing in a company valued entirely on its future earnings. If Microsoft can grow earnings at a CAGR of 15% per year, its current P/E ratio will start to look very cheap very quickly if the stock price languishes. But in general, a company that can sustain growth over time will be a good investment even if the valuation is expensive today.

Dow Jones Extends Winning Streak; Netflix Among 7 Best Stocks To Buy And Watch

A long-time financial journalist, Dan is a veteran of SmartMoney, MarketWatch, CBS MoneyWatch, InvestorPlace and DailyFinance. As a senior writer at AOL’s DailyFinance, Dan reported market news from the floor of the New York Stock Exchange and hosted a weekly video segment on equities. Microsoft has been sizzling hot in 2023, with its shares skyrocketing more than 50%. The company has been a big beneficiary of the explosion of interest in generative AI, thanks to its partnership with and large stake in ChatGPT creator OpenAI. Different investors mark the beginning of a new bull market in slightly different ways. In my view, a new bull market begins when two criteria are met.

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17 analysts rate the company a hold, while another 3 rate it a sell. Here’s the same analysis on Dow Jones stocks, using a standardized combined credit ranking. In 2022, the quintile of highest-credit Dow Jones companies outperformed the lowest quintile by 21.1%.

Among the so-called “Magnificent Seven” stocks, Tesla (TSLA) lost 1.4% early Friday, while Nvidia (NVDA) inched lower. IBD Leaderboard stock MercadoLibre moved further past a 1,398.59 buy point, according to IBD MarketSmith pattern recognition, during Thursday’s 1.9% gain. On Thursday, the Dow Jones Industrial Average dropped more than 0.1%, while the S&P 500 gained 0.1%.

That translated to Strong per-share earnings growth in 2023 and in the most recent quarter. Investors should consider buying in if they’re seeking a conservative place to park cash. Microsoft generates $68 billion in free cash flow annually, a figure that’s expected to rise to $89 billion by 2024. Yet, the data suggests that Cisco’s shares have fallen too far. CSCO’s justified value remains at $48.50, a 24% upside, and credit analysts remain relatively positive about the company’s outlook.

Best Dow Jones Stocks To Buy

For example, many firms invest heavily To improve their positions in data centers and AI. Visa cardholders will continue to spend, especially in terms of cross-border payments. Beyond that, consumers continue to simply use credit cards more. Visa’s revenues increased by 11% in the most recent quarter, reaching $8.6 billion.

Merck shares gained 0.7% Friday, further out of the 5% buy area above the entry. Inside the Dow Jones Industrial Average, Amgen (AMGN) was among Friday’s biggest gainers, up 1.3%. The worst three Dow Jones stocks in 2023 were Walgreens Boots Alliance (WBA), Chevron (CVX) and Johnson & Johnson (JNJ), with respective declines of 30, 16% and 11%.

That’s a much more attractive valuation than fellow Dow Jones member and top credit-card rival Visa. I think the stock should have plenty of room to run in the new year. American Express (AXP 0.27%) was added to the Dow Jones in 1982, making it one of the index’s five longest members. The company is a giant in the financial services industry, providing global credit-card payment-processing services. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer.

The index tracks the value of the U.S. residential real estate market. Investor optimism and growing earnings helped the following 10 Dow components reach new all-time highs in recent weeks. The Dow Jones Industrial Average is underperforming the S&P 500 and Nasdaq Composite year to date. But there are 10 dividend-paying Dow components that reached new all-time intraday and closing highs within the last month.

Tom Yeung is a market analyst and portfolio manager of the Omnia Portfolio, the highest-tier subscription at InvestorPlace. He is the former editor of Tom Yeung’s Profit & Protection, a free e-letter about investing to profit in good times and protecting gains during the bad. Target prices are a historically poor predictor of stock performance. These historical trends have turned Wall Street analysts into permanent bears.

High capital expenditures and low margins mean that few oil majors perform well over more extended periods. Falling oil prices also leave “stranded assets” of oil in the ground that are no longer profitable to pump. Canada’s oil sands contain millions of barrels of oil that are only profitable to best dow jones stocks to buy extract if prices remain above $70. Since 2012, the IT provider has seen operating income shrink from $22.5 billion to $4.8 billion and revenues decline by almost half. A botched transition from PCs to services and the slow adoption of cloud computing have left the once-dominant firm far behind.

And quantitative models are only a starting point; these models can help tilt the odds in our favor, and it’s up to us to get closer to 60-40. Bullish analysts got things right in 2021 and 2019 and failed to outperform in 2020. Both of these companies actually have lower revenues than 10 – 15 years ago too, indicating that their profit growth is mostly from margin expansion. This can only last for so long before there’s no more excess expenses left to cut.

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