I don’t make business decisions — or any choice of consequence — based on the musings of any one person. Nor do I recommend that you blindly follow others’ guidance, no matter how reasoned it may appear. Remember, you must always do your due diligence. Still, I like to observe what other analysts are thinking. And at this juncture, this approach has significant implications for the venerable Dow Jones Industrial Average constituent stocks.
As I’m sure you’ll agree, many, if not most, people currently have that speculative fire in their bodies. For one thing, the major indexes have soared to all-time highs, which of course has buoyed several Dow Jones stocks. Furthermore, investors have seemingly accepted the “it is what it is” situation. Fundamentally, bull markets and a rising mental health crisis don’t always go together. But we’re making money so, who cares, right?
Whenever I have questions about certain sectors or news items, I turn to the work of InvestorPlace heavyweights like Will Ashworth and Dana Blankenhorn. Both are highly respected and consistently provide quality insights. Both are ranked in the top 3% of the nearly 7,800 bloggers tracked by Tipranks.com.
But Dana’s comments struck me not so much with his specific words but his cautionary tone over recent articles. In this big, beautiful bull market? Really?
Let’s be fair — Blankenhorn isn’t calling for gold, guns and doomsday bunkers (that’s my beat). Mainly, he doesn’t see the wisdom in going all-in on certain overvalued names, which is reasonable. But I’ll take it a step further: many folks are undoubtedly concerned about the ugly fundamentals, yet don’t want to miss out on a rally if they’re wrong. For those in that camp, Dow Jones stocks offer an excellent balance.
Earlier this year, Kiplinger contributor Brian Bollinger noted that the large-capitalization companies that make up the Dow 30 all pay dividends. Of course, that status is presently under threat due to the impact of the novel coronavirus pandemic. But it goes to show you that the attributes that mark Dow Jones stocks — robust and mostly predictable businesses — are always relevant. And with all that’s going on today, you’ll want to consider these industry stalwarts.
- Amgen (NASDAQ:AMGN)
- Apple (NASDAQ:AAPL)
- Home Depot (NYSE:HD)
- IBM (NYSE:IBM)
- 3M (NYSE:MMM)
- Microsoft (NASDAQ:MSFT)
- Walmart (NYSE:WMT)
Given editorial constraints, I can only pick seven. If your favorite company isn’t on this list, don’t take it as a slight. Rather, this is just one man trying to make sense of this situation like all of you. So without further ado, here are my ideas for Dow Jones stocks to buy amid this uncertainty.
As the novel coronavirus rudely transitioned from an exotic foreign problem to a domestic one, several biopharmaceutical companies made a pivot to producing vaccines and/or treatments. For Amgen, the pharma giant opted for the latter, partnering with Eli Lilly (NYSE:LLY) to manufacture the company’s potential antibody therapeutic.
Nevertheless, there’s still a case to be made for AMGN stock. First, unless Covid-19 turns into an endemic, the coronavirus play is a temporary catalyst. At that point, several pharma players that pivoted aggressively will have to make a non-pandemic argument for their equity premiums. Second, Amgen may benefit from the synergies involved in participating in the treatment race. Frankly, scientific research is rarely wasted, even if it doesn’t generate immediate revenue.
Further, once we get past or learn to manage this pandemic, AMGN stock is tied to several long-term, chronic conditions. Essentially, we could see pent-up demand for Amgen’s core businesses once we return to at least somewhat normal, making it one of the more intriguing Dow Jones stocks to consider.
On the surface, Apple is a no-brainer when it comes to Dow Jones stocks to buy. For starters, the company has a license to print money. Every iPhone launch results in massive hype, which invariably translates into sales. What’s remarkable is the sustained enthusiasm. Competitors have been catching up, threatening to commoditize smartphones if they already haven’t been. Yet AAPL stock keeps trucking higher.
But can this momentum last? All good stories come to an end or at least incur a correction before the next leg higher. Further, the latest employment report didn’t provide much encouragement. True, the economy added 245,000 jobs in November. But in October, employers added 610,000 jobs. Therefore, the labor market is decelerating just as we’re about to enter a dark winter with Covid-19.
Fundamentally, this doesn’t augur well for AAPL stock. Last month, I discussed some of the concerns facing Apple. However, I also observed that AAPL has charted a bullish pennant formation, a pattern that signaled bullishness for other fundamentally challenged companies like DraftKings (NASDAQ:DKNG).
If you want to take a nearer-term bet with your Dow Jones stocks, this is the one to do it with.
Home Depot (HD)
In my opinion, Home Depot is one of the Dow Jones stocks to buy as an anchor for your retirement portfolio. More than likely, HD stock is not going to make you rich. But what it will do is provide confidence during low or ambiguous moments (like today) while engineering consistent upside during bull markets.
But during pandemics and other forms of disaster, Home Depot really could be considered a national security play. I know we tend to view members of the military as serving in the frontlines. But the reality is that “About 80% of the jobs in the military are non-combat occupations.” And that’s according to Military.com.
Further, I think it’s time to be appreciative not only toward those who serve in uniform but to the everyday workers that keep our shelves stocked and essential stores open. I know I’m grateful for Home Depot offering some sense of normalcy during the new normal. Millions of customers feel the same way, which is net positive for HD stock.
With the push toward artificial intelligence, machine learning and other remarkable innovations, technology has been a pivotal catalyst for many Dow Jones stocks. However, one company tends to be left out of the discussion, IBM. I get it — historically, “Big Blue” has disappointed stakeholders with its lackluster market performances. As well, it’s been weighed down by its legacy business units. But things can change, which is why I’m long-term optimistic on IBM stock.
Further, this isn’t just lip service. Recently, the tech icon has been very acquisitive, securing companies to bolster IBM’s presence in AI and its hybrid cloud computing initiatives. Further, many high-profile corporate clients have signed onto IBM’s innovative solutions, including Nespresso, PNC (NYSE:PNC) and PayPal (NASDAQ:PYPL). Though IBM stock is in the red for the year, this to me represents a discounted buy.
Plus, Big Blue offers myriad relevant services, with one of the most important being cybersecurity. Based on the awful numbers we’re seeing with Covid-19 cases, work from home may be extended. Cynically, that could offer upside for IBM.
One of the more controversial ideas among Dow Jones stocks, 3M unfortunately received sharp criticism during the onset of the Covid-19 crisis. Primarily, President Trump slammed the company for frustrations involved with production of its N95 respirators. Later, Fox Business took 3M to task, insinuating that management needed to do more to help the American people. MMM stock wasn’t exactly a popular investment early on in the pandemic.
Still, it’s one of the few American companies in the business of N95 respirators. Basically, 3M was too critical to ignore. Plus, if SARS-CoV-2 becomes an endemic, you’d have to figure that MMM stock would enjoy cynical upside. After all, the supply constraint for these respirators should ease up. Also, there’s now a culture of mask acceptance — that is for those who haven’t become brainwashed by Fox News.
But most importantly, evidence indicates that severe economic crises affecting teenagers later become permanent emotional scars. With the coronavirus being both an economic calamity as well as a once-in-a-century health threat, we’ll never forget 2020. That should put 3M in a different light compared to the old normal.
While I don’t like to keep going to the same well over and over, Microsoft has demonstrated relevance and resilience during the Covid-19 crisis. First, the company owns business applications thanks to its Microsoft 365 Software-as-a-Service platform. Programs like Word and Excel, among many others, have been indispensable for remote-toiling worker bees. As these folks transition to the gig economy, they will become essential services.
Further, MSFT stock has driven higher thanks to coronavirus-fueled platforms like Microsoft Teams. This has enabled connectivity as companies both large and small made the sudden pivot to remote operations. True, Microsoft does have competition in the enterprise social industry in the form of Salesforce (NYSE:CRM) buying Slack Technologies (NYSE:WORK). However, Microsoft’s brand power will be difficult to unseat.
Finally, the versatility of MSFT stock is something you don’t want to ignore, especially with this pandemic. Specifically, video games represent the perfect entertainment platform during the new normal because of their contactless nature. That bodes well for Microsoft’s latest Xbox gaming console, making it one of the most dependable Dow Jones stocks.
Back during the onset of the coronavirus pandemic, it was Black Friday every day at big-box retailers like Walmart. On one hand, this represented an unfortunate lack of cooperation within this country. On the other hand, who could blame them? With a mysterious killer illness spreading everywhere, it was time to look out for number one.
Now, I’m not sure if we’ll see another panic like the one we suffered in February and March. However, it’s not completely out of the question. At time of writing, we’re seeing more than 200,000 new daily Covid-19 infections, with over 2,000 succumbing to the disease. As well, there are over 101,000 people currently hospitalized.
I’m not trying to be a killjoy. But stats are stats, which in this case seems to support WMT stock in the worst way possible.
That said, not everything associated with Walmart is based on cynicism. For instance, the personal saving rate has declined substantially since its April 2020 peak of 33.7%. And people with disposable income are gradually spending it on discretionary items. Therefore, WMT stock is a name to watch, just in case we slog through this mess.
On the date of publication, Josh Enomoto held a long position in gold.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.