All 30 Dow Jones Stocks Ranked: The Pros Weigh In
The Dow Jones Industrial Average is made up of 30 blue chips that are tops in their industries. But some Dow Jones stocks are better opportunities than others.
The Dow Jones Industrial Average is having a heck of a year. The blue-chip bastion of 30 stocks is tops among the three major indexes and notching record closing highs seemingly every other week.
Let's take a look at the tape: The Dow was up 12.6% on a price basis for the year-to-date as of June 9, with the collection of 30 Dow Jones stocks just edging past the broader S&P 500's gain of 12.3%. The tech-heavy Nasdaq Composite, dogged by interest-rate worries, brings up the rear with a 7.9% increase.
But not all Dow stocks are benefiting equally as the economy gropes its way back toward something of a post-pandemic normal.
A number of last year's top Dow Jones stocks, propelled by COVID-19 conditions, are now playing catch-up or even generating negative year-to-date returns. By the same token, Dow components at the center of the so-called recovery trade are the ones most responsible for lifting the average to unprecedented levels.
The end result is that some Dow stocks having disappointing years look like stone cold bargain buys, analysts say. On the other side of the ledger, some blue-chips putting up outsized gains look uncomfortably overpriced.
Although the first half of 2021 has favored value-oriented or recovery plays over pandemic outperformers and growth stocks, there's no telling whether or when the trend could end.
So to get a sense of what Wall Street thinks about the second half of 2021, we screened the Dow by analysts' average recommendation, from worst to first, using data from S&P Global Market Intelligence.
Here's how the ratings system works: S&P surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Scores between 3.5 and 2.5 translate into a Hold recommendation. Any score higher than 3.5 is a Sell rating, and a score equal to or below 2.5 means that analysts, on average, rate the stock as being Buy-worthy. The closer a score gets to 1.0, the stronger the Buy recommendation.
Read on as we show you how Wall Street's analysts rate all 30 Dow stocks and what they have to say about their prospects.
Stock prices, analysts' recommendations and other data as of June 9, courtesy of S&P Global Market Intelligence.
#30: Walgreens Boots Alliance
- Market value: $46.2 billion
- Dividend yield: 3.5%
- Analysts' average recommendation: 3.0 (Hold)
The COVID-19 pandemic benefited lots of retailers in the consumer staples industry, but Walgreens Boots Alliance (WBA, $53.43) sure wasn't one of them. Lockdowns, a shift to online shopping and a weak cold-and-flu season not only hurt the global pharmacy chain's sales, but also its profit margins.
That said, the vaccine rollout, wider pharmacy margins, strong sales overseas and a lower tax rate allowed management to raise its outlook in April. And the market is certainly upbeat on the name.
Indeed, WBA has been one of the best Dow stocks so far in 2021, rising by more than a third, vs. a gain of almost 13% for the blue-chip average. Analysts, however, remain cautious on shares at current levels.
"We remain comfortable on the sidelines for now," writes Raymond James analyst John Ransom, who rates WBA at Market Perform (the equivalent of Hold), "though note that the potential for margin improvement in the second half of the fiscal year and beyond, the sale of the Alliance Healthcare business and resulting balance sheet flexibility, and a new CEO at the helm do leave us more optimistic than at any point in the past year."
AmerisourceBergen (ABC) in January agreed to acquire the majority of WBA's Alliance Healthcare businesses in a $6.5 billion deal, while new CEO Rosalind Brewer took the reins from Stefano Pessina in mid-March.
Despite some recent struggles, WBA has been good to income investors. Over the past five years, the company has raised the dividend at an annualized rate of 6.4% – a trend analysts expect to continue.
Of the 22 analysts covering Walgreens' stock tracked by S&P Global Market Intelligence, 18 are on the sidelines at Hold. Meanwhile, just one calls it a Strong Buy, two call it a Sell and one hasn't provided a rating at all. That gives WBA the lowest overall average recommendation among the 30 Dow Jones stocks.
#29: 3M
- Market value: $117.5 billion
- Dividend yield: 2.9%
- Analysts' average recommendation: 2.89 (Hold)
3M (MMM, $202.74), which makes everything from adhesives to electronic touch displays, continues to be one of the less appealing Dow stocks on analysts' radar.
Shares are outpacing the blue-chip average by about 4 percentage points for the year-to-date, helped by optimism over a global economic rebound, but much of the Street remains cautious nonetheless.
"While 3M navigated its first quarter with commendable dexterity, it did not raise its 2021 prior guidance," writes William Blair analyst Nicholas Heymann, who rates shares at Market Perform (equivalent of Hold). "Instead, 3M highlighted increasingly strained global supply chains, rising raw materials costs outstripping price increases, the uneven pace of global reopening, and critical component and material shortages."
Much of the Street largely agrees with the Hold thesis on MMM. Of the 19 analysts with ratings on the stock tracked by S&P Global Market Intelligence, two say Strong Buy, two rate it at Buy, 12 call MMM a Hold, two have it at Sell and one says Strong Sell.
Meanwhile, their average target price of $202.06 gives MMM stock essentially no implied upside over the next 12 months or so.
Long-term income investors can at least take heart in 3M's almost unrivaled history of dividend growth. The conglomerate is a member of the S&P 500 Dividend Aristocrats, a list of stocks that have increased their payouts annually for at least 25 consecutive years. MMM hiked its payout for a 53rd straight year in February 2021 – a 1% increase in the quarterly dividend to $1.48 per share.
#28: Travelers
- Market value: $38.9 billion
- Dividend yield: 2.3%
- Analysts' average recommendation: 2.75 (Hold)
Warren Buffett gave Travelers (TRV, $154.74) the boot from Berkshire Hathaway's (BRK.B) portfolio last year, and analysts remain mostly unimpressed with the Dow Jones stock's prospects for 2021 too.
The property and casualty insurer posted better-than-expected first-quarter results in April, helped in part by unexpected strength in underlying margins and continued strong renewal rates in business insurance.
But low interest rates, which hurt the returns that insurers earn on their fixed-income holdings, and Travelers' high exposure to deteriorating conditions in the workers' compensation industry, make it tough for most analysts to recommend this stock.
"We believe the company is positioned to underperform the peer group due in part to a relative lackluster growth outlook," writes Raymond James analyst C. Gregory Peters, who rates TRV at Underperform (the equivalent of Sell).
Peters is more bearish than most of the Street, but its consensus recommendation still stands no higher than Hold. Of the 20 analysts covering TRV tracked by S&P Global Market Intelligence, four rate it at Strong Buy, one says Buy, 12 have it at Hold, two say Sell and one calls it a Strong Sell.
The Street expects the company to generate average annual EPS growth of 7.8% over the next three to five years. With shares trading at 13.1 times analysts' estimated earnings for 2022, the valuation would appear reasonable.
However, with an average target price of $161.63, the Street gives TRV stock extremely modest upside over the next year or so.
#27: Intel
- Market value: $230.2 billion
- Dividend yield: 2.4%
- Analysts' average recommendation: 2.71 (Hold)
Intel (INTC, $57.00) has fallen far behind the competition on any number of fronts, which is why analysts and investors were so delighted when the chipmaker hired Pat Gelsinger, former CEO of VMWare (VMW), to take over in February.
Heck, some observers said it was the best decision the troubled company made in more than a decade. And, indeed, this Dow stock has been a disappointing performer. Shares are up just 3% over the past three years vs. a gain of 52% for the S&P 500.
Although some big investors think INTC stock is perhaps at an inflection point – Cavalry Management Group, a hedge fund with more than $230 billion in assets under management, recently initiated a large stake in the company – the Street remains solidly on the sidelines.
One important detail to heed: Even though INTC gets a consensus recommendation of Hold, the stock has an unusually high number of Sell opinions, which are rare on the Street, especially among Dow Jones stocks. S&P Global Market Intelligence tracks 42 analysts with opinions on Intel. Of those, 10 rate it at Strong Buy, five say Buy and 17 rate it at Hold. Seven, however, slap a Sell recommendation on shares, and another three have them at Strong Sell. That's noteworthy.
You can count Wedbush analyst Matt Bryson among the INTC bears.
"Our belief remains that INTC is mostly doing the right things, but that results will be painful over an elongated period as: 1) revenues suffer from past missteps, and 2) costs increase as Intel invests in its turnaround strategy," writes Bryson, who rates shares at Underperform.
"Net, our view remains that the stock recovered too much/too quickly and we continue to see near-term downside from current levels," the analyst adds.
#26: International Business Machines
- Market value: $134.6 billion
- Dividend yield: 4.4%
- Analysts' average recommendation: 2.69 (Hold)
International Business Machines (IBM, $150.67) gets mostly lukewarm reviews from analysts, which seems fair enough. After all, they have watched Big Blue's top line shrink relentlessly for 10 years and counting.
The big news around IBM these days is its planned spinoff of its Managed Infrastructure Services business into a separate publicly traded company later this year. The new company, to be called Kyndryl, will house slower-growth, lower-margin businesses from IBM's Global Technology Services unit. The spinoff is intended to make the remaining entity a higher-margin, higher-growth operation.
At the same time, IBM continues to incorporate Red Hat, which it acquired for $34 billion in 2019. The marriage is intended to help IBM catch up to Microsoft (MSFT) and Amazon.com (AMZN) in highly lucrative cloud-based services.
Some analysts say the twin moves should finally shake IBM out of its decade-long funk of declining sales.
"We upgraded IBM to Buy in July 2020 on our belief that IBM had turned an important corner with the transformative Red Hat deal," writes Argus Research analyst Jim Kelleher (Buy). "The spinoff of Kyndryl further facilitates this transition to a growing and more profitable company."
As the analyst notes, however, "skepticism toward IBM runs deep after a decade of declining revenue." Indeed, if analysts' ratings are any guide, most of the Street views IBM as a "show me" story.
Although three analysts rate IBM at Strong Buy and one says Buy, fully 10 call it a Hold. Another two have it at Sell. Add it all up, and their consensus recommendation comes to Hold.
In some encouraging news: In January 2021, IBM became the most recent Dow Jones stock added to the S&P 500 Dividend Aristocrats. And after a nominal uptick in the payout in April, IBM extended its dividend-growth streak to 26 years.
#25: Verizon
- Market value: $236.2 billion
- Dividend Yield: 4.4%
- Analysts' average recommendation: 2.61 (Hold)
Verizon (VZ, $57.05), the Dow's only telecommunications stock, has been a laggard in 2021, trailing the blue-chip average by a wide margin.
Although the market is down on the stock, the Street is more split.
CFRA Research, for example, has a Sell opinion on the stock, citing increased competition from the likes of T-Mobile US (TMUS), as well as the costs of competing in ultra-fast 5G wireless network services. For example, VZ spent a whopping sum to license 5G spectrum at a March federal auction.
"We have a negative view of the $42.9 billion increase in debt as a result of spending on C-band spectrum and note the company will have to spend an additional $10 billion to deploy it over the next three years," writes CFRA Research analyst Keith Snyder.
On the bull side, Argus Research (Buy) applauds the investment in 5G.
"We think that Verizon's recent large spectrum acquisition will be crucial in the company's buildout of true 5G service," writes Argus' Joseph Bonner. He adds, however, that although VZ has often been the leader in next-generation wireless technology, it "may be playing more of a catch-up game with 5G as T-Mobile forges ahead."
Both analysts – and the Street in general – love VZ's May decision to sell its media assets, including Yahoo and AOL, to private equity group Apollo Global Management (APO) for $5 billion.
"We like the fact that VZ has finally accepted defeat with its media ambitions and that it is receiving a better price for the business than we expected," writes CFRA's Snyder.
Of the 28 analysts surveyed by S&P Global Market Intelligence covering VZ, four rate it at Strong Buy, three say Buy and 21 call it a Hold.
#24: Caterpillar
- Market value: $128.5 billion
- Dividend yield: 1.8%
- Analysts' average recommendation: 2.56 (Hold)
Caterpillar (CAT, $234.65), the world's largest manufacturer of construction and mining equipment, is up by more than a third so far this year, boosted by the nascent global recovery and expectations for increased infrastructure spending.
But whenever a stock comes this far, this fast, questions about its valuation are sure to arise – and that's helped leave analysts split on the name.
Consider that CAT trades at almost 25 times expected earnings – a 28% premium to its own five-year average, according to Refinitiv Stock Reports Plus. Some folks would say that's pricey.
On the other hand, the Street expects Caterpillar to generate average annual EPS growth of almost 20% for the next three to five years. Some folks would say that paying 25 times expected earnings for a long-term growth rate of 20% is more than reasonable.
At CFRA Research, valuation and fundamentals help CAT get four stars (out of five) on the firm's list of recovery-play stocks.
"The COVID-19 pandemic provided CAT with a much-needed opportunity to scale back production (which was too high in 2019 and early 2020)," writes CFRA Research analyst Elizabeth Vermillion (Buy). "We think CAT's inventory levels are appropriate to satisfy rising demand across end-markets as these markets continue (or begin) to recover from COVID-19-related shutdowns, stay-at-home orders and manufacturing disruptions."
UBS Global Research, however, maintains a Neutral (Hold) rating, in part because analyst Steven Fisher believes CAT is due for multiple contraction. Fisher forecasts the stock to trade at 19.5 times 2022 earnings, down from a prior outlook for 20. (The Street's average earnings multiple for 2022 stands at 20.3.)
The bottom line is that seven analysts rate CAT at Strong Buy, three say Buy, 14 call it a Hold, one says Sell and two say Strong Sell. It's hardly the strongest recommendation among the 30 Dow Jones stocks, but it is more bullish than bearish.
#23: American Express
- Market value: $131.8 billion
- Dividend yield: 1.1%
- Analysts' average recommendation: 2.50 (Buy)
American Express (AXP, $164.09) is the first of our Dow stocks to receive a consensus recommendation of Buy, per S&P Global Market Intelligence's scoring system. The Street's collective wisdom pulls AXP just over the edge from Hold, with six Strong Buy calls, five Buys, 14 Holds and three Sells.
The pandemic dealt a blow to billed business, especially in the critical travel and entertainment (T&E) category. Although non-travel and entertainment spending recovered to pre-COVID levels early in 2021, T&E is still playing catch up.
Bulls are counting on the resumption of domestic travel, which is indeed rebounding thanks to the widespread adoption of vaccines. They can also point to AXP's robust loan portfolio, which is buoyed by consumers being flush with cash.
"American Express continues to report strong – and improving – credit quality despite the pandemic," writes Piper Sandler analyst Christopher Donat, who rates shares at Overweight (equivalent of Buy). "For the remainder of 2021 we expect the benefits of recent stimulus (including tax refunds) to linger for several months."
Analysts have other concerns, as well.
Other observers worry about American Express' rate of recovery. Credit Suisse rates American Express at Underperform (equivalent of Sell), and the research firm means it, putting it among its "highest-conviction" calls. Among other reasons, CS says "that at the current valuation level, AXP appears to be increasingly overvalued relative to its own historical valuation."
"Mail volume data remains an important barometer of competitiveness," notes Credit Suisse analyst Moshe Orenbuch. So it's something of a concern that although industry-wide mail marketing volume is back to pre-pandemic levels, AXP's volume of mail marketing has dipped below levels it saw in late 2020 and early 2021, the analyst writes.
As borderline as the Street's Buy call may be, let's not forget that AmEx is one of Warren Buffett's all-time favorite stocks. The CEO of Berkshire Hathaway first bought shares in the firm in 1963 and remains its largest shareholder by far today.
Incidentally, shares are up roughly 38% for the year-to-date, making AXP the Dow's second-best performing stock so far in 2021.
#22: Dow
- Market value: $51.4 billion
- Dividend yield: 4.1%
- Analysts' average recommendation: 2.47 (Buy)
Shares in Dow (DOW, $68.84) are outpacing the blue-chip average by about 12 percentage points so far in 2021, helped by resurgent global demand for its specialty chemicals and materials.
And it's not just the market that has perked up on the name. Analysts' consensus recommendation stands at Buy for the first time in more than 18 months. However, the bull case on DOW is far from a slam dunk. Five analysts rate the stock at Strong Buy and two say Buy, but 11 call it a Hold and one has it at Strong Sell.
That's quite a split considering the Street expects DOW to generate average annual EPS growth of almost 28% over the next three to years. Furthemore, despite that outsized profit forecast, shares trade at only 11 times analysts' fiscal 2021 earnings estimate.
So is DOW a bargain or not?
Deutsche Bank analyst David Begleiter notes that Dow is enjoying strong demand and low inventories. Prices for polyethylene, a key Dow product, rose for six consecutive months and are forecast to hit a record high in June.
On the downside, prices are forecast to peak this month.
"We remain at a Hold as we see very tough comparisons ahead, and potential investment headwinds starting in the second quarter," writes Begleiter.
Bulls, for their part, expect the Dow Jones stock to keep reaping the benefits of a global recovery even if polyethylene prices moderate as expected.
"Despite our view that supply will normalize in the back half of 2021 after facing tight conditions, we expect resilient demand for packaging, improving construction trends and momentum in architectural coatings to facilitate sales and earnings growth in 2021," writes CFRA analyst Richard Wolfe (Buy) in a note to clients.
#21: Amgen
- Market value: $137.6 billion
- Dividend yield: 2.9%
- Analysts' average recommendation: 2.41 (Buy)
Amgen (AMGN, $239.52), which took Pfizer's spot among the 30 Dow Jones stocks in 2020, is one of Bank of America Global Research's favorite biopharmaceuticals stocks for 2021.
In fact, it has no shortage of fans these days.
The company's top line has bounced back in a big way since declining sales of mature products caused revenue to retreat in 2019. And bulls think AMGN's return to growth is just getting started.
One catalyst could come in the form of the biopharma firm's latest oncology drug. In May, the Food and Drug Administration approved Lumakras, a treatment for non-small cell lung cancer that has spread to other parts of the body. BofA has high hopes for the therapy.
"Lumakras is positioned for a strong launch given its strong clinical profile, increasing testing and past targeted oncology launches," writes analyst Geoff Meacham (Buy).
Other bulls point to a return to pre-COVID business trends, as well as AMGN's well-stocked pipeline.
"We expect prescription volume for certain Amgen drugs to improve in the second half of 2021 as pandemic concerns recede and more patients visit physicians' offices," writes Argus Research analyst David Toung (Buy). "We also expect revenue growth to be driven by new drugs, biosimilars and products acquired from M&A and in licensing deals."
Of the 29 analysts issuing opinions on AMGN tracked by S&P Global Market Intelligence, nine rate it at Strong Buy, four say Buy, 13 call it a Hold, one says Sell and two call it a Strong Sell. They expect the company to deliver average annual EPS growth of 8.2% for the next three to five years.
#20: Boeing
- Market value: $145.1 billion
- Dividend yield: N/A
- Analysts' average recommendation: 2.28 (Buy)
Boeing (BA, $248.06) suffered an annus horribilis in 2020. The aerospace and defence company took the largest annual loss in its history, hurt by the COVID-19 pandemic, the long-running crisis over the safety of its 737 MAX airliner and a $6.5 billion charge related to the delay of its all-new airliner, the 777X.
But with the 737 MAX back in service and the slow resumption of air travel, analysts are significantly more positive on the name.
Nine months ago, the Street's consensus recommendation was a firm Hold, but it now stands comfortably in Buy territory. Eleven analysts rate BA at Strong Buy, two say Buy, nine call it a Hold and three have it at Strong Sell. Thanks in part to easier comparisons, they forecast EPS to increase at an average annual rate of 12.5% over the next three to five years.
BA stock is outperforming the broader market by a wide margin for the year-to-date – and shares trade at more than 45 times 2022 EPS estimates – but Argus Research (Buy) thinks they still offer "deep value."
"Boeing has superior long-term prospects due to its significant backlog and strong presence in the growing commercial aerospace industry," writes analyst John Eade in a note to clients. "Further, its profitable Defense segment is a top 5 defense contractor. The shares are down about 40% from their all-time high of $440, set in February 2019. We still see value in the depressed shares."
At CFRA Research, analyst Colin Scarola upgraded BA to Strong Buy from Buy in May. He notes that surging domestic air travel in China is pressuring regulators to recertify the 737 MAX in order to meet increased passenger-mile demand.
"We suspect BA's MAX recertification efforts in China are finally gaining traction due to this economic reality, and that these advancements are behind BA's rumored rate increase plans to bring MAX production back to 40-plus per month in 2022 vs. only around 10 in Q1 2020," writes Scarola.
#19: Procter & Gamble
- Market value: $330.0 billion
- Dividend yield: 2.6%
- Analysts' average recommendation: 2.23 (Buy)
Consumer staples stocks such as mega-cap Procter & Gamble (PG, $134.79) were early winners from the pandemic and rolling lockdowns. People will always need products such as P&G's Charmin toilet paper, Head & Shoulders shampoo and Crest toothpaste.
But now some analysts worry about increasingly difficult year-over-year comparisons – not to mention higher costs for raw materials and other expense pressures.
The market is even more concerned than the Street. Shares in P&G are off about 3% for the year-to-date. The Dow, meanwhile, is up around 13% so far this year.
Procter & Gamble has announced price increases to offset higher costs, notes UBS Global Research. And innovation in brands such as Pantene, Dawn Powerwash and Pampers Baby Dry continues to drive strong results. But analyst Sean King maintains a Neutral (Hold) recommendation on shares, partly due to increased commodity and freight costs, as well as foreign exchange headwinds.
Stfiel Research largely concurs with that view.
"Our Hold rating reflects less expected relative outperformance as comparisons become increasingly difficult, including downside risk from slower sales growth and higher input costs," Stifel's Mark Astrachan writes in a note to clients.
The Street's consensus recommendation, however, still works out to Buy. Seven analysts have PG at Strong Buy, four say Buy, 10 call it a Hold and one says Sell. They expect Procter & Gamble to deliver average annual earnings growth of 8.0% over the next three to five years.
Income investors should be aware that P&G is a dividend-growth machine. Indeed, it's a member of the S&P 500 Dividend Aristocrats, having raised its payout annually for 65 years. The last hike came in April 2021, with a 10% increase in the quarterly dividend to 86.98 cents per share.
#18: Honeywell
- Market value: $158.2 billion
- Dividend yield: 1.6%
- Analysts' average recommendation: 2.20 (Buy)
Analysts as a group are bullish on Honeywell (HON, $227.81) even as shares lag the broader market so far this year. Bears, however, think the sprawling industrial conglomerate's outlook and fundamentals make HON greatly overpriced at current levels.
Sell calls are relatively rare on the Street, so it stuck out when CFRA Research downgraded HON to Strong Sell from Sell in mid-May.
"We see further underperformance in the year ahead given high expectations for growth amid material headwinds and pricey valuation," writes CFRA's Colin Scarola. "Several key end markets face material headwinds, including stricter climate regulation, electric vehicle adoption, and less commuting to work hurting its oil and gas clients; remote work trends leading to office downsizing and thus weaker demand for building technologies; and tapering global COVID-19 cases normalizing revenue from protective gear."
On a more bullish note, Credit Suisse rates HON at Outperform (Buy), citing better-than-expected first quarter results and higher full-year outlook. Higher margins across all Honeywell business segments – most notably in aerospace – and aggressive cost reductions also bolster analyst John Walsh's upbeat view.
Of the 25 analysts issuing opinions on HON tracked by S&P Global Market Intelligence, nine rate it at Strong Buy and another five say Buy. Meanwhile, nine call it a Hold, one says Sell and one says Strong Sell. Collectively, they forecast the company to generate average annual EPS growth of 11.2% over the next three to five years.
One thing that the bulls can point to is the company's record of success and reputation. Honeywell's blue-chip reputation makes it an ideal stock for long-term investors, says Argus Research (Buy), citing its history of paying and raising the dividend, financial strength and talented management team.
#17: JPMorgan Chase
- Market value: $493.2 billion
- Dividend yield: 2.2%
- Analysts' average recommendation: 2.12 (Buy)
JPMorgan Chase (JPM, $162.94) gets a consensus recommendation of Buy from Wall Street analysts, who have become incrementally more bullish on the stock over the past month.
JPM's strength across multiple business lines and an improving economic backdrop make it a standout, analysts say. It also helps that interest rates appear to be headed directionally higher.
"We see JPM as the best managed large diversified bank and it is poised to benefit from higher consumer and commercial loan activity expected in the second half of 2021 and 2022," writes CFRA Research analyst Kenneth Leon (Buy). "We see strength in the capital markets, which benefits one of the market leaders in both debt and equity underwriting, advisory services, and trading activity."
Leon adds that JPM – the nation's largest bank by assets – is the only one of the Big Four banks to have "materially grown net interest income in the last five years." For the record, the other three big banks are Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C).
Of the 26 analysts issuing opinions on JPM tracked by S&P Global Market Intelligence, 11 rate it at Strong Buy, six say Buy and six have it at Hold. One rates shares at Sell and two call JPM a Strong Sell, largely based on valuation.
For what it's worth, Warren Buffett sold what was left of Berkshire Hathaway's rapidly diminishing stake in the bank at the end of 2020. On the flip side, JPM shares have more than doubled the market since then, at 28% returns year-to-date.
#16: Chevron
- Market value: $207.8 billion
- Dividend yield: 5.0%
- Analysts' average recommendation: 2.11 (Buy)
Chevron (CVX, $107.78) is the lone energy-sector member of the 30 Dow Jones stocks, which is too bad for anyone indexing their investments to the blue-chip average. Sure, CVX is up a fabulous 28% for the year-to-date, but rival Exxon Mobil (XOM), which was jettisoned in 2020, is sitting on a 52% gain for 2021.
Warren Buffett, chairman and CEO of Berkshire Hathaway, surprised Wall Street by initiating a sizable stake in the oil major in the final quarter of 2020. Even more surprising, however, was that he sold more than half of the CVX stake just three months later.
Wall Street, however, has remained more consistent in its view. Analysts' consensus recommendation stands at Buy, and their conviction has stayed pretty stable for at least 18 months.
Although energy prices aren't expected to make huge moves in the year ahead, the outlook for oil and gas is much improved and should only get better as the global economy recovers from the depths of the pandemic, analysts say.
Indeed, CVX was able to take advantage of the worst of the industry's woes in July 2020 by acquiring Noble Energy in a $5 billion all-stock transaction.
Chevron, like the rest of the oil and gas industry, has been forced to double down on capital spending cuts and other cost savings as it grapples with ultra-low energy prices. And it's a strategy the oil major has the wherewithal to pull off – or at least, so say the pros.
"In this volatile energy environment, a company's balance sheet strength and place on the cost curve are critical, and favor integrated oil companies that are well positioned to manage a potentially long period of volatile oil prices," writes Argus Research analyst Bill Selesky (Buy). "CVX is one of these companies as it benefits from best-in-class production growth, industry-low operating costs, and a strong balance sheet."
The analyst adds that the dividend, which yields nearly 5%, is "safe and sustainable," and he expects Chevron to resume stock buybacks in the near term.
Nine analysts rate CVX at Strong Buy, six say Buy and 12 rate it at Hold, per S&P Global Market Intelligence. They project the company to generate average annual EPS growth of 23.5% over the next three to five years, thanks to easy year-over-year comparisons.
#15: Cisco Systems
- Market value: $227.7 billion
- Dividend yield: 2.7%
- Analysts' average recommendation: 2.11 (Buy)
Cisco Systems (CSCO, $54.02) is up by more than a fifth so far in 2021 and the Street thinks shares have more room to run.
Of the 28 analysts covering CSCO tracked by S&P Global Market Intelligence, 10 rate it at Strong Buy, five say Buy and 13 have it at Hold. That said, this is hardly a growth stock. The Street forecasts EPS to increase at an average annual rate of just 5.1% over the next three to five years.
CSCO is transitioning from being heavily dependent on hardware such as internet routers and switches to higher-growth software and cloud services.
It has been a challenge, to say the least.
Deutsche Bank analyst Matthew Niknam has a Hold rating on CSCO, noting that although the company is seeing revenue momentum, supply-chain headwinds are weighing on near-term margins.
A global chip shortage is putting pressure on a wide range of industries, from vehicle manufacturers to network equipment makers. CFRA analyst Keith Snyder, meanwhile, calls the stock a Buy, citing strong quarterly results despite limited hardware supplies.
"CSCO expects component shortages to be an issue at least through the end of '21, but noted it has long-term supply commitments which will limit the margin impact due to price increases," Snyder says. "We also note that the strong growth in software will further limit the impact of hardware shortages. We view these results as very strong given the extremely challenging market conditions and believe it is set for a strong rebound in fiscal 2022."
#14: Goldman Sachs
- Market value: $130.0 billion
- Dividend yield: 1.3%
- Analysts' average recommendation: 2.08 (Buy)
Goldman Sachs (GS, $382.78) is the top-performing Dow Jones stock so far this year, up 45% through June 8. And analysts remain bullish on the investment bank's stock, regardless of those outsized gains.
"We believe the capital markets will remain very active in a low rate, risk-on environment from corporate issuers, M&A and investors," writes Kenneth Leon, director of equity research at CFRA Research (Strong Buy). "We think GS can extend high growth in asset/wealth management and consumer banking, while investment banking gains wallet share."
Capital markets strength really plays to Goldman Sachs' hand, analysts note.
Compared to peers, GS has the largest portion of revenue coming from the capital markets, notes Piper Sandler. Although that could make the investment bank more sensitive to a slowdown in trading and underwriting, Piper, which rates the stock at Overweight, expects more strength ahead.
That very same capital markets exposure, however, leads Argus Research analyst Stephen Biggar to rate Goldman's stock at Hold.
"With a high percentage of revenue tied to investment banking and various client services, Goldman remains more sensitive to swings in capital markets activity than other global banks," the analyst writes. He expects "tough comparisons for investment banking and trading businesses" in the second half of 2021.
Overall, though, GS is solidly in the camp of Dow Jones stocks that have earned the pros' admiration. Of the 26 analysts covering GS tracked by S&P Global Market Intelligence, 10 rate it at Strong Buy, seven say Buy, four have it at Hold, one says Sell and one says Strong Sell. They forecast the bank to generate average annual EPS growth of 15% over the next three to five years.
#13: Coca-Cola
- Market value: $239.2 billion
- Dividend yield: 3.0%
- Analysts' average recommendation: 1.92 (Buy)
The pandemic put a crimp on sales at restaurants, bars, cinemas, live sports and other events, all of which took a toll on Coca-Cola (KO, $55.48). But now that the economy is reopening, analysts increasingly like KO as a recovery play.
After all, KO is coming up against easy comparisons as the world emerges from the COVID-19 era, essentially setting it up for a spring-loaded recovery in revenue.
Although some analysts caution that the overhang of ongoing tax litigation could weigh on investor sentiment regarding KO shares, certain macroeconomic and fundamental factors point to it as one of the better recovery names – particularly among Dow Jones stocks – for investors who love big, sturdy blue chips.
At CFRA Research, for example, Garrett Nelson rates Coca-Cola at Hold on tax litigation unknowns. But he says the "plummeting U.S. dollar should boost KO's operating income and on-premise sales should improve as restaurants and other venues gradually re-open."
Elsewhere on the Street, Bernstein Research's Callum Elliott in January initiated coverage of this bluest of blue chips with an Outperform, telling clients the company is undergoing an "underappreciated cultural overhaul" and "multiyear turnaround story" set to drive a prolonged period of sales, margin and earnings expansion.
Of the 26 analysts covering Coca-Cola tracked by S&P Global Market Intelligence, 11 rate it at Strong Buy, six say Buy and nine call it a Hold. They expect the company to deliver average annual earnings growth of almost 7% over the next three to five years.
Finally, let's not forget Coca-Cola's status as a Dividend King. The beverage company has lifted its payout annually for almost 60 years. It's also one of Warren Buffett's favorite stocks.
#12: Johnson & Johnson
- Market value: $436.0 billion
- Dividend yield: 2.6%
- Analysts' average recommendation: 1.89 (Buy)
Analysts have a consensus recommendation of Buy on Johnson & Johnson (JNJ, $165.59). Among the arguments in favor of the Dow stock, bulls point to its strong pharmaceutical pipeline, as well as a rebound in demand for medical devices as patients undergo elective procedures put off during the pandemic.
"We expect the recovery in elective procedures and patient visit volumes to accelerate as the pandemic is starting to get under control in the U.S., which should result in a strong recovery in Medical Devices sales and solid growth in Pharma revenues," writes CFRA Research analyst Sel Hardy, who rates shares at Buy.
Also important is Johnson & Johnson's success in integrating Momenta Pharmaceuticals, which it acquired in 2020 in a $6.5 billion deal.
"In addition, the company is benefiting from a growing consumer business, boosted by newly acquired brands" says Argus Research analyst David Toung (Buy), noting strength in oral care, wound care and skin health & beauty products.
Investors and analysts alike no doubt also appreciate the company's commitment to delivering income to investors. JNJ announced a 5% quarterly dividend increase in April 2021, to $1.06 per share from $1.01 per share. That marked this Dividend Aristocrat's 59th consecutive year of dividend increases.
Of the 19 analysts issuing opinions on JNJ tracked by S&P Global Market Intelligence, nine rate it at Strong Buy, four say Buy, five have it at Hold and one calls it a Sell. They expect the firm to deliver average annual EPS growth of 7.5% for the next three to five years.
#11: Home Depot
- Market value: $326.8 billion
- Dividend yield: 2.2%
- Analysts' average recommendation: 1.86 (Buy)
A country basically cooped up at home was great for business at Home Depot (HD, $307.34), and analysts don't think the good times have to stop with the end of the pandemic.
"Although home improvement spending in the coming quarters may begin to decelerate from what are likely unsustainable growth levels, we expect home investment to remain above pre-COVID levels as the longer-term tailwinds for the home improvement industry are generally favorable," writes BofA Global Research analyst Elizabeth Suzuki (Buy.) "We remain encouraged on the medium-term outlook for HD as the dominant retailer in a strong category of retail."
That's a sentiment shared by much of the Street. Argus Research's Christopher Graja (Buy) hits on some other common bullish themes:
"We believe that the drivers of future growth remain the same. There has been significant underinvestment in housing. About 70% of U.S. homes are more than 25 years old and likely in need of upgrades and repairs. We believe that increased time at home has prompted more consumers to take on small home improvement projects. HD has gained new customers and those customers have increased their engagement with Home Depot."
HD is another of the blue-chip Dow stocks getting love from the pros. Of the 35 analysts covering Home Depot tracked by S&P Global Market Intelligence, 17 call it a Strong Buy, eight have it at Buy, nine say Hold and one rates it at Strong Sell. Their long-term forecast calls for average annual EPS growth of 10.4% over the next three to five years.
Analysts also like HD's valuation in a pricey market. At less than 23 times expected earnings, HD trades essentially in line with the S&P 500 and its own five-year average.
#10: Merck
- Market value: $187.5 billion
- Dividend yield: 3.5%
- Analysts' average recommendation: 1.79 (Buy)
Merck (MRK, $74.04) has been underperforming the market by so much for so long that analysts say it's simply too cheap to go without.
Indeed, the pharmaceutical giant's shares are off more than 5% for the year-to-date. That lags the Dow by 18 percentage points. The situation is even worse over the past 52 weeks, where MRK lags the blue-chip average by more than 32 percentage points.
Analysts forecast Merck to generate average annual earnings growth of roughly 8% over the next three to five years. Yet the stock changes hands at only 11 times 2022 earnings estimates. The S&P 500, meanwhile, trades at around 22 times projected earnings.
Central to Merck's fundamental performance is Keytruda, a blockbuster cancer drug approved for more than 20 indications. That said, analysts are quick to point out that MRK is not a one-trick pony.
They also note that Merck should see stronger end-market demand for its products as physician offices reopen, elective surgeries resume and pet owners return to veterinary offices.
"We keep our strong positive long-term outlook for MRK," says CFRA Research, which rates shares at Buy. "We see a favorable patent setup with no key brands losing marketing exclusivity until 2022, and MRK's growth engine, Keytruda, on patent until 2028."
That said, the recent spinoff of Merck's women's health business into a separate publicly traded company called Organon (OGN) did cause some analysts to rethink the Dow stock.
Argus Research analyst David Toung downgraded MRK to Hold from Buy in May, saying "the spinoff will lower Merck's operating margin in the near term as Organon includes a range of high-margin products." It also means Keytruda will now represent a larger portion of Merck's total revenue, Toung adds.
Eleven analysts call MRK a Strong Buy, seven say Buy and another six have it at Hold, according to S&P Global Market Intelligence.
#9: Apple
- Market value: $2.1 trillion
- Dividend yield: 0.7%
- Analysts' average recommendation: 1.78 (Buy)
Shares in Apple (AAPL, $127.13) are actually down for the year-to-date, trailing the blue-chip average by a wide margin. But analysts are banging the Buy drum on the iPhone maker as much as ever, arguing that recent underperformance gives investors a chance to get one of the good Dow Jones stocks at an even better price.
Six months ago, analysts' average recommendation score came to 1.90 (Buy). Today, at 1.78, the Street has even more conviction on the name. Of the 41 analysts issuing opinions on AAPL tracked by S&P Global Market Intelligence, 23 rate it at Strong Buy and eight call it a Buy. Another eight have it at Hold, while two rate it at Strong Sell.
They forecast the $2 trillion-plus company to generate average annual EPS growth of 13.4% for the next three to five years, while shares go for just 24 times their 2022 earnings estimate.
Part of the weakness in the Dow stock can be attributed to the global semiconductor shortage, but bulls believe such fears are overblown.
"Despite well-known industry chip supply constraints, we believe AAPL is executing extremely well and is seeing robust demand across all business lines," writes CFRA Research analyst Angelo Zino (Buy).
Another concern pressuring shares are the tough year-over-year comparisons AAPL is set to face as it laps the launch of iPhone 12 and related upgrade "supercycle." Zino, again, cautions against such pessimism.
"While we do expect hardware growth to decelerate in the coming quarters, we are optimistic about AAPL's long-term business prospects and pipeline (e.g., Artificial Reality glasses, Apple car, health care, shift towards hardware as a service)," Zino writes.
And let's not forget that AAPL hiked its dividend by 7% earlier this year and announced a new $90 billion share repurchase program, the analyst adds.
The Street and investors alike can also take heart in the fact that there is no bigger Apple bull than Warren Buffett. The chairman and CEO of Berkshire Hathaway has allocated almost half of his holding company's equity portfolio to AAPL.
"I don't think of Apple as a stock," Buffett has said. "I think of it as our third business."
#8: Walmart
- Market value: $389.7 billion
- Dividend yield: 1.6%
- Analysts' average recommendation: 1.74 (Buy)
Walmart (WMT, $139.08) is another one of the Dow stocks that's having a post-pandemic hangover so far in 2021. Shares are off about 3.5% for the year-to-date in a reverse of last year's COVID-19-fueled run.
As a one-stop shop for all manner of goods, and consumer staples in particular, Walmart, was poised to do well during the depths of the pandemic, but it really shined thanks to its huge e-commerce business.
Indeed, U.S. e-commerce sales rose another 37% in WMT's fiscal first quarter ended April 30. They have now more than doubled over the past two years. Although WMT remains a distant second to Amazon.com, the fact remains that it is now the second-largest U.S. e-commerce retailer by market share.
Analysts say that's a pretty nifty feat for a company that was once derided as a brick-and-mortar dinosaur.
"Walmart's past investments helped it to win business and generate strong cash flow during the pandemic," writes Argus Research analyst Christopher Graja (Buy). "The company is taking advantage of its financial strength and ability to invest now to extend its advantage into the future. Its finances are top tier within this sector, the store environment is improving and e-commerce capabilities are growing."
As the world's largest retailer – with a growing e-commerce business – WMT is a stock worth paying up for, analysts say.
"Walmart's business is defensible and has the omni-channel capabilities, financial strength and leadership to win and gain market share in today's retail environment, thereby justifying a higher-than-historical multiple," writes Raymond James analyst Bobby Griffin (Outperform).
Twenty analysts rate WMT stock at Strong Buy, 10 have it at Buy, eight call it a Hold and one says Sell, according to S&P Global Market Intelligence.
Interestingly, Bridgewater Associates, the massive hedge fund led by legendary investor Ray Dalio, counts WMT as its top individual stock pick.
#7: McDonald's
- Market value: $172.7 billion
- Dividend yield: 2.2%
- Analysts' average recommendation: 1.71 (Buy)
McDonald's (MCD, $231.47) is bouncing back from the pandemic, which caused a steep drop in in-store traffic, and naturally, analysts see it as a golden way to bet on the post-COVID-19 recovery.
Although shares are lagging the blue-chip average for the year-to-date, the Street expects outperformance ahead as the fast-food giant comes up against easier year-over-year comparisons.
UBS's Dennis Geiger, who rates shares at Buy, expects sustained sales strength in the U.S. and a return to "solid international trends once government restrictions are lifted" in key markets.
"We believe MCD maintains a highly visible catalyst path supporting further upside for shares," Geiger writes in a note to clients. "We expect a global reopening supports a still somewhat underappreciated reacceleration in international trends in coming quarters, while U.S. momentum likely continues & appears positioned for a multiyear period of outperformance."
The analyst's bottom line? MCD is a core long-term holding with increasing global market share and accelerating growth in free cash flow – or the cash leftover after capital expenditures, dividend payments and financial obligations are met.
Upcoming revenue catalysts include ongoing strength in drive-thru and delivery services, contributions from the new chicken sandwich and initial gains from the BTS Meal promotional efforts.
Here's how Wedbush's Nick Setyan sums up his Outperform call: "We believe MCD's ongoing menu, technology, marketing and capital expenditure investments render visibility into sustained sales growth in a post-COVID global restaurant environment."
Nineteen analysts rate the Dow stock at Strong Buy, seven have it at Buy and nine call it a Hold, according to S&P Global Market Intelligence.
#6: Nike
- Market value: $208.3 billion
- Dividend yield: 0.8%
- Analysts' average recommendation: 1.66 (Buy)
In the race for price returns, Nike (NKE, $131.84) is one of the Dow Jones stocks that smoked the broader market in 2020, but it is looking pretty winded so far this year.
Shares in the maker of athletic footwear and apparel maker beat the blue-chip average by nearly 30 percentage points last year, but they're down 6.6% in 2021. That trails the Dow Industrials by more than 19 percentage points.
Analysts remain strongly bullish, however, viewing NKE's underperformance as a chance to go bargain shopping.
NKE benefited from the pandemic because consumers became more interested in staying healthy and dressing casually in the work-from-home environment. Bears emphasize that those days are coming to an end.
An ongoing Chinese consumer backlash against Western brands is also scaring investors out of the stock, notes Stifel analyst Jim Duffy (Buy). Although the "near-term backlash is a non-trivial impact to revenue for Nike," the analyst believes it will be short-lived.
"While increasingly mindful of risk to the China business from any escalating geopolitical tensions, we continue to view Nike as a solid core holding for large-cap growth investors," Duffy writes. "With the athletic category having long-duration global secular and structural tailwinds, we see Nike as uniquely positioned."
The selloff on China concerns and reversal of pandemic trends have NKE shares trading at 33.4 times analysts' 2022 EPS estimate. That's down from 45 times expected earnings at the beginning of the year. In other words, NKE stock is 26% cheaper than it was six months ago.
Meanwhile, analysts forecast NKE to generate average annual EPS growth of 22.6% over the next three to five years.
Of the 29 analysts covering this Dow stock surveyed by S&P Global Market Intelligence, 16 rate it at Strong Buy, 8 say Buy, four have it at Hold and one slaps a Sell call on the name.
#5: Visa
- Market value: $495.5 billion
- Dividend yield: 0.6%
- Analysts' average recommendation: 1.58 (Buy)
Although the pandemic greatly curtailed spending in a number of Visa's (V, $232.31) categories – most notably travel and entertainment – those headwinds should now be in the past.
Indeed, the gradual economic reopening – and accelerating secular growth in cashless payments, helped by the perception that cash is "dirty" – make a solid bull case for Visa stock.
Piper Sandler upgraded Visa to Overweight (the equivalent of Buy) from Neutral (Hold) in early June, thanks to a return to post-COVID-19 normal and certain advantages over its largest competitor.
"We expect Visa to benefit more from a vaccine-driven U.S. recovery than Mastercard," writes Piper Sandler analyst Christopher Donat in a note to clients. "Visa generated 45% of its pre-pandemic revenue from the United States, compared to only 32% for Mastercard. We believe higher vaccine rates in the United States are already driving higher domestic activity, which we view as a prerequisite to future cross-border travel."
The company is also getting in on the cryptocurrency craze.
"Visa looks to be an infrastructure provider and enabler for crypto transactions," writes William Blair analyst Robert Napoli (Outperform). "Visa is now working with 50 different digital currency platforms, up from the recently published 35."
Longer term, as the world's largest payments network, Visa is especially well-positioned to benefit from the growth of cashless transactions and digital mobile payments, analysts say.
Indeed, the Street expects Visa's EPS to increase at an average annual rate of more than 20% over the next three to five years.
Twenty-one analysts rate the Dow stock at Strong Buy, 13 say Buy and three have it at Hold, according to S&P Global Market Intelligence. One analyst has a Sell rating on the name.
#4: Salesforce.com
- Market value: $218.6 billion
- Dividend yield: N/A
- Analysts' average recommendation: 1.60 (Buy)
Salesforce.com (CRM, $236.09) – which is one of the newest Dow Jones stocks, added just last year – was doing cloud computing before cloud-based services were cool. The stock has been clobbering the broader market on a trailing return basis for years, and analysts expect more outsized gains to come.
After all, CRM is ideally positioned to take advantage of today's trends, the Street says.
"The pandemic appears to have accelerated the already powerful secular trend toward enterprise digital transformation," writes Argus Research's Joseph Bonner (Buy). "The new work-from-home paradigm (or perhaps the developing home/office hybrid) has increased demand for software solutions for cloud computing, distributed computing, edge computing and collaboration software."
Salesforce was the top customer relationship software provider even before the pandemic hit, Bonner adds. With the digitization trend only gaining momentum, CRM is rapidly innovating, taking market share in its core markets and expanding internationally.
Stifel Research (Buy) concurs with that view, and notes that the company's $28 billion acquisition of Slack last year is another reason to be optimistic about CRM.
"M&A remains a big component of the Salesforce story, as the company followed up its big MuleSoft acquisition of 2018 with an even larger deal in Tableau last year," writes Stifel's Tom Roderick. "We believe these moves signal urgency on the part of management to capitalize on one of the more robust IT spending environments it has observed in recent years."
Twenty-eight analysts covering CRM tracked by S&P Global Market Intelligence rate the stock at Strong Buy, 10 say Buy and nine call it a Hold. They forecast the company to generate average annual EPS growth of almost 22% for the next three to five years.
#3: Walt Disney
- Market value: $319.9 billion
- Dividend yield: N/A
- Analysts' average recommendation: 1.59 (Buy)
Coronavirus took a huge bite out of some of Walt Disney's (DIS, $176.04) most important businesses: namely, its theme parks and studios. But after encouraging quarterly results, analysts say business is set to bounce back in a big way.
Disneyland and other California amusement parks have reopened with restrictions. And admissions at Florida's Disney World continue to climb.
"With mask mandates lifted and capacity constraints loosened further, we would not be surprised to see a step change in attendance in the near future," writes Deutsche Bank analyst Bryan Kraft (Buy).
But that's nothing compared to what DIS has on its hands in the streaming media wars.
Disney+ is a smashing success. The streaming platform, which launched in November 2019, has already amassed almost 100 million subscribers – a staggering rate of growth. Consider that Disney+ now has about half as many subscribers as Netflix (NFLX) – but Netflix had a roughly 12-year head start.
"The old saying that 'luck favors the prepared' can be applied to Disney's November 2019 launch of the Disney+ video service," writes Argus Research analyst Joseph Bonner (Buy). "The launch, exemplified by rapid subscriber acquisition, was a success even before the pandemic. Disney has the assets, intellectual property and management team needed for a robust revival as COVID-19 recedes."
Sixteen analysts rate the Dow stock at Strong Buy, per S&P Global Market Intelligence, while six say Buy and five call it a Hold. They forecast average annual EPS growth of more than 23% for the next three to five years.
#2: UnitedHealth Group
- Market value: $378.5 billion
- Dividend yield: 1.5%
- Analysts' average recommendation: 1.58 (Buy)
UnitedHealth Group (UNH, $401.10) is a hedge-fund favorite, and Wall Street gives it high marks too.
As the largest health insurer by both market value and revenue – and a member of the Dow Industrials to boot – UNH is sort of a must-have stock for institutional investors seeking broad exposure to the healthcare sector.
Meanwhile, like many of the other Dow Jones stocks, analysts' consensus recommendation on the name comes to Buy. Of the 27 analysts covering the stock tracked by S&P Global Market Intelligence, 16 rate UNH at Strong Buy, six say Buy, three have it at Hold and one calls it a Sell.
Furthermore, analysts have become increasingly bullish over the past two months, with their average recommendation score on the Dow stock dropping from 1.68 to 1.58, or on the cusp of a Strong Buy call.
"With the increase in COVID-19 vaccinations, we expect medical utilization patterns to return to normal levels, while at the same time we anticipate higher utilizations resulting from missed medical visits and delayed electives," writes CFRA Research analyst Sel Hardy, who rates the stock at Strong Buy.
A significant part of the bulls' investment thesis on the name comes down to valuation. UNH trades at less than 19 times estimated earnings for 2022. They go for an even more attractive 16.6 times 2023's expected earnings. And yet EPS is forecast to increase at an average annual pace of more than 14% for the next three to five years.
Put succinctly, UNH looks like a rare bargain stock in an otherwise pricey market. The S&P 500 currently goes for around 22 times earnings estimates.
#1: Microsoft
- Market value: $1.9 trillion
- Dividend yield: 0.9%
- Analysts' average recommendation: 1.33 (Strong Buy)
Microsoft (MSFT, $253.59) might be second only to Apple when it comes to market value, but it beats the iPhone maker handily when it comes to analysts' ardor.
Indeed, it's the only one of the 30 Dow Jones stocks to receive a consensus recommendation of Strong Buy.
What gives MSFT the edge over Apple (Buy) when it comes to the Street's sentiment is its overwhelming success in cloud services.
Wedbush analyst Daniel Ives (Outperform) called Microsoft's most recent quarterly results "another cloud masterpiece" as the company continued to see "massive" momentum in that business.
"Microsoft remains our favorite large-cap cloud play and we believe the stock (despite being on a treadmill path of late) will start to move higher over the coming quarters as the Street further appreciates the cloud transformation story in Redmond," Ives writes in a note to clients. "While many tech stocks overall are all being lumped together as part of the work-from-home trade, we believe the growth story at MSFT is not slowing down as more enterprises/governments head down this cloud path over the coming years."
CFRA Research analyst John Freeman (Strong Buy) adds that investors shouldn't lose sight of the company's other growth areas. For example, the launch of the Xbox Series X gaming console drove 51% year-over-year growth in Xbox content and services revenue in the final calendar quarter of 2020.
And let's not forget MSFT's suitability for income investors. This component of the Dow Jones Industrial Average offers a modest dividend yield of 0.9%, but it has been improving its payout at a robust clip of more than 9% compounded annually over the past five years.
Twenty-seven analysts rate MSFT at Strong Buy, 11 say Buy and one calls it a Hold, per S&P Global Market Intelligence.
