In this article, we will take a look at 11 Best Dow Stocks to Buy Now. If you want to see some more of the best Dow stocks to buy, go directly to 5 Best Dow Stocks To Buy Now.
Dow stocks are stocks listed on the prestigious Dow Jones Industrial Average, which is a stock market index that includes 30 prominent companies.
The Dow Jones Industrial Average was created by Charles Dow and Edward Jones in 1896 as a price weighted index to track 30 large companies listed either on the NYSE or NASDAQ. It’s considered as a benchmark for blue chips listed in the United States.
Due to the Federal Reserve having raised interest rates 5 times this year and expectations that the central bank could increase rates even further, the Dow has dropped almost 20% and there could be more downside in the future if economic data fails to meet expectations. Given that it is comprised mainly of blue chips, the Dow has fallen less year to date than the S&P 500 or the NASDAQ indexes, which have fallen around 25% and 34% respectively.
Given the uncertainty, it could be a good idea for long term investors to have a well diversified portfolio across many different stocks across many different sectors. Among the blue chip stocks, here are 11 of the best we think long term investors could potentially consider adding to their portfolios.
Francisco Amaral Leitao / shutterstock.com
Methodology
For our list of 11 Best Dow Stocks To Buy Now, we took 11 Dow Jones stocks that we think have the right combination of financial strength, and growth potential for long term investors. We then ranked those 11 Dow Jones stocks using the number of hedge funds in our database that held shares in those same stocks at the end of Q2 2022.
11 Best Dow Stocks To Buy Now
11. Honeywell International Inc. (NYSE:HON)
Number of Hedge Fund Holders: 42
Honeywell International Inc. (NYSE:HON) is a diversified technology and manufacturing company that makes auxiliary power units, propulsion engines, integrated avionics, and much more. Despite the S&P 500 falling around 25% year to date and the Dow falling almost 20%, Honeywell International Inc. (NYSE:HON) shares have only fallen around 16% year to date due to the company’s strong businesses. As of October 12, the company trades at a forward P/E ratio of 18.12 and has an average target price of $204.04 per share. On 10/12/22 Joshua Pokrzywinski of Morgan Stanely cut his price target to $187 from $192 and kept an ‘equal rating’ on Honeywell International Inc. (NYSE:HON).
Alongside The Walt Disney Company (NYSE:DIS), salesforce.com, inc. (NYSE:CRM), and Apple Inc. (NASDAQ:AAPL), Honeywell International Inc. (NYSE:HON) is one of the best Dow stocks to buy now.
10. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 51
The Boeing Company (NYSE:BA) is a leading commercial jetliner and military aircraft manufacturer. The company also produces satellites, missile defense, human space flight and launch systems and other products. On 10/12/22, Charles Minnervino of Susquehanna noted that The Boeing Company (NYSE:BA)’s delivery data for September showed improvement in 737 MAX deliveries. The analyst reiterated his positive rating and $192 price target.
Meridian Funds also said the following about The Boeing Company (NYSE:BA) in its second quarter investor letter,
We similarly remained invested in largely out-of-favor The Boeing Company (NYSE:BA), a global leader in developing and producing commercial jet aircraft. Due to some self-inflicted wounds and a bit of bad luck, as well as dramatic declines in air travel early in the pandemic, investor sentiment for this company has simply been awful. As part of our contrarian thinking, however, we view the business as critical to global transportation needs and see multiple catalysts to improve sentiment. In addition to the current surge in air travel worldwide, ramped up production of the 737 MAX aircraft and the pending restart of 787 Dreamliner deliveries should help turn broader sentiment. Additionally, we anticipate a meaningful inflection in cash flow as Boeing starts delivering aircraft currently in storage as well as the eventual expansion of its production in both core platforms.
9. Amgen, Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 55
Amgen, Inc. (NASDAQ:AMGN) discovers, develops, manufactures, and delivers human therapeutics worldwide. Despite the Dow falling almost 20% year to date, Amgen, Inc. (NASDAQ:AMGN) has rallied 9.1% in 2022 thanks to stronger sentiment.
On 10/11/22 Matthew Harrison of Morgan Stanley upgraded the stock to ‘Overweight’ from ‘Equal Weight’ and upped his price target to $279 from $257. Harrison is also bullish on Amgen, Inc. (NASDAQ:AMGN)’s AMG133’s potential.
8. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) is a leading financial services company that provides charge and credit payment card products and travel related services worldwide. On 10/12 Kunaal Malde of Atlantic Equities lowered his price target on American Express Company (NYSE:AXP) to $165 from $175 and kept a ‘Neutral’ rating citing increasing likelihood of a recession for the United States and global economies.
ClearBridge Investments mentioned American Express Company (NYSE:AXP) in a second quarter investor letter,
“In financials, recession fears outweighed the benefits of rising interest rates; in the Strategy, Bank of America (BAC) and American Express Company (NYSE:AXP) felt these concerns most acutely, although we remain comfortable with these businesses and their strong fundamental positions over the medium-to-long term.”
7. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 69
Goldman Sachs Group, Inc. (NYSE:GS) is a leading bank on Wall Street that provides financial services for corporations, financial institutions, governments and individuals worldwide. Although Goldman Sachs Group, Inc. (NYSE:GS) shares are down 22% year to date, the company has strong long term growth potential given its strong brand name. Due to the market decline, Goldman Sachs Group, Inc. (NYSE:GS) trades at a forward P/E ratio of 7.79.
6. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) is a leading home improvement retailer. As of December 31, 2021, the company had 2,317 stores across the United States. Although shares of The Home Depot, Inc. (NYSE:HD) have fallen 32% year to date, some analysts are optimistic. On 10/3/22 Jonathan Matuszewski of Jefferies upped his price target on Home Depot to $394 from $392 and kept a ‘Buy’ rating citing the company’s home maintenance and emergency repair business could still be attractive if discretionary home improvement outlays weaken.
Diamond Hill Capital said the following about The Home Depot, Inc. (NYSE:HD) in its Q2 2022 letter,
“The Home Depot, Inc. (NYSE:HD) is a high-quality operator in the home improvement industry. Macroeconomic concerns, particularly the rise in mortgage rates, caused the share price to pull back and trade at a greater discount to our estimate of intrinsic value. We believe Home Depot is well positioned to continue gaining share due to its premium real estate locations, strong operations and recent investments in its supply chain. We like Home Depot’s exposure to the professional customer and believe in its ability to take market share in this segment as we believe home improvement spending has the potential to remain resilient in upcoming years.”
Like The Home Depot, Inc. (NYSE:HD), The Walt Disney Company (NYSE:DIS), salesforce.com, inc. (NYSE:CRM), and Apple Inc. (NASDAQ:AAPL) are all on our list of Best Dow Stocks to Buy Now.
Click to continue reading and see 5 Best Dow Stocks To Buy Now.
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Disclosure: None. 11 Best Dow Stocks To Buy Now is originally published on Insider Monkey.
