In this article, the readers will be able to know the best Dow Jones stocks to buy as per Wall Street experts.
The Dow Jones Industrial Average, popularly known as Dow Jones or Dow, has been categorised as one of the oldest and significantly followed equity indexes of the US. This was founded over a century ago in 1896 by Charles Dow, who was holding the position of editor of Wall Street Journal. Earlier, the index was made up of only 12 companies which were commodity-focused.
In the year 1928, Dow Jones index got expanded to ~30 stocks. Now, what is Dow Jones? What is its composition? And how this index is different from other indexes?
Well, this is the price-weighted index, which differentiates it from several other market indexes weighing businesses on the basis of market capitalizations of their businesses.
Before listing best Dow Jones stocks to buy as per Wall Street experts, we believe that our readers should know that the stock market is loaded with uncertainty, and making investments in Dow Jones are great when it comes to stability and defense. That being said, in a bull market, Dow Jones might not always compete with growth of several other indexes which have more technology companies.
Now, just as an example, so far in 2023, the overall US market reacted positively to consistency in interest rates and slowdown in inflation. But, did these measures actually supported the stocks’ uptrend which we have seen lately?
Well, the answer is yes!
Benchmark S&P 500 saw strong returns of over ~24% for the investors on a YTD basis. NASDAQ Composite outperformed the S&P 500, with the index returning more than ~44% to the global investors. Finally, Dow Jones has delivered the return of ~13%.
However, we believe that our investors should not believe these numbers in isolation.
Dow Jones has actually delivered strong returns for value investors in the long term, outperforming the S&P 500 and NASDAQ Composite.
For instance, even though S&P 500 has delivered stellar returns in the current year, the index is still slightly below the peak it touched in early half of 2022. NASDAQ saw a decline of ~5%. In comparison, Dow Jones has seen handsomely better returns as compared to both such indexes, with returns of ~3% during the similar time span.
With this in mind, we will now have a look at best Dow Jones stocks to buy as per Wall Street experts.
1. The Coca-Cola Company
The company is engaged in selling non-alcoholic beverage products in the US. It buys concentrate and syrups from several other beverage manufacturers under particular license. It then develops, packages, markets, and distributes such beverages to a range of retailers.
It has released its 3Q results, with net revenues increasing by ~8% and organic revenues (non-GAAP) rising ~11%. It exhibited continued momentum from 1H of the year. The company’s revenue performance consisted ~9% increase in price/mix and ~2% improvement in concentrate sales. Concentrate sales came in line with the unit case volume.
Operating margin of the company came in at ~27.4% in comparison to ~27.9% in the previous year Comparable operating margin (non-GAAP) was 29.7% against ~29.5% in the previous year. Operating margin decline was mainly because of items which impacted comparability and currency headwinds.
The company saw gains in value share in total non-alcoholic ready-to-drink (NARTD) beverages. Cash flow from operations came in at $8.9 billion YTD, exhibiting a rise of $861 million as compared to the previous year, as a result of strong business performance and working capital initiatives. This was partially offset by transition tax payment which was made during 2Q.
2. Honeywell International Inc.
The company is a multi-industry giant having the largest installed bases of equipment. It carries out operations through 4 business segments, such as aerospace, building technologies, performance materials and technologies, and safety and productivity solutions.
It has announced results for 3Q, with year-over-year sales growth of ~3% and organic sales increase of ~2%. These increases were strongly supported by double-digit organic sales growth which was seen in commercial aviation, defense and space, and process solutions.
Operating margin of the company saw the expansion of ~140 basis points to reach ~20.9% and segment margin got expanded by ~80 basis points to sit at ~22.6%. This was supported by expansion in Honeywell Building Technologies. EPS for 3Q came in at ~$2.27, which was roughly flat in comparison to previous year on reported basis and was up ~1% year-over-year adjusted.
The company was able to execute through tough environment in 3Q, meeting or surpassing guidance for all the metrics and demonstrating the company’s culture of execution and accountability.
Organic sales growth was supported by aerospace segment, in which continued supply chain improvements resulted in significant sales growth in both commercial aviation and defense and space.
For FY23, the company expects sales in the range of $36.8 billion – $37.1 billion and organic growth of between 4% – 5%.
3. Nike, Inc.
The company is the largest athletic footwear and apparel brand in the world.
Its 2Q revenues came in at $13.4 billion, exhibiting a rise of 1% on reported basis in comparison to prior year and was down 1% on the currency-neutral basis. Wholesale revenues of the company came in at $7.1 billion, down by 2% on reported basis and was down 3% on currency-neutral basis.
Cash and equivalents and short-term investments of the company came at $9.9 billion, exhibiting a fall of approximately $0.7 billion in comparison to the last year. This was because cash generated by operations got offset by the share repurchases, cash dividends, capex expenses and bond repayment.
Conclusion
While the above-mentioned stocks are some of the best Dow Jones stocks to buy as per Wall Street experts, we believe that investors should consider their time horizon and risk appetite before proceeding.
Now, how did we narrow down to these 3 stocks? Well, the analyst ratings of these stocks were given due weightage to provide readers some content for investment needs. Later on, we checked their financials and overall outlook.
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