We’re in the midst of a bull market, albeit one that has been rather sluggish at times. And often, in bull markets, it’s better to buy high-flying, riskier growth stocks than the blue-chip names like those in the Dow Jones Industrial Average. However, with inflation still somewhat elevated, the U.S. government dealing with a very high debt load, and multiple geopolitical threats lurking, I can certainly understand why some investors would want most of their stock portfolios to be devoted to blue chips.
For older investors who are close to retirement and those who are already retired, focusing on such stocks certainly makes a great deal of sense. What’s more, there are several names within the Dow that have excellent businesses and great prospects going forward.
With all of that said, here are three good Dow stocks to buy at this point.
Nike (NKE)
I believe that Nike (NYSE:NKE) is likely to benefit from a shift by consumers away from leisure travel. I hold that view because, in line with my previous expectations, the post-pandemic travel boom appears to be easing, as two major airlines recently cut their third-quarter guidance.
As a result, many consumers should have more funds to spend on Nike’s footwear going forward.
Nike’s fiscal fourth-quarter results, reported on June 29, came in below analysts’ average estimates, but the company’s top line still climbed a healthy 8% versus the same period a year earlier, excluding currency fluctuations. And at the end of the quarter, its sales, excluding currency changes, were jumping 15% year-over-year, Nike reported. While the firm’s net income sank 27% year-over-year to $1 billion, improving supply chain trends and the softening labor market should enable it to boost its profits in the coming quarters.
Additionally, I believe that China’s stimulus efforts should meaningfully improve that country’s economy, significantly lifting Nike’s revenue and profits there.
Caterpillar (CAT)
The owners of Caterpillar (NYSE:CAT) stock recently were given positive news from one of the company’s largest rivals, Japan’s Komatsu (OTC:KMTUY). Specifically, the Japanese firm reported that “there is no indication that (the) demand for mining equipment is slowing down” and suggested that its 2023 profit could exceed its previous outlook.
Meanwhile, the sales of CAT’s equipment for the producers of fossil fuels should climb a great deal with oil prices high and the demand for electricity surging amid the electric vehicle and artificial intelligence booms.
As I pointed out in a previous column, Caterpillar should also get a significant lift from the growing trend of companies building more factories in the U.S.
Despite all of these positive catalysts, CAT stock has a very low forward price-earnings ratio of just 13.6 times.
The company’s great prospects and low valuation make it one of the best Dow stocks to buy.
JPMorgan Chase (JPM)
JPMorgan’s (NYSE:JPM) “Cash from operations, net interest income, and net income…all increased above pre-pandemic levels” last quarter, Seeking Alpha columnist The Gaming Dividend recently reported. The bank’s interest from its loans soared to $21.8 billion in Q2 from $15.2 billion during the same period a year earlier. Also noteworthy is that the bank’s net income margin came in at 35%, way above the bank’s average level of 25%.
Meanwhile, Zacks gives JPM stock ” a Momentum Style Score of A,” and, in Q2, “1,804 institutions increased their stakes in JPM by 60.6 million shares, while 1,633 institutions lowered their stakes by 58.06 million shares, making it one of the top institutional stock picks.” Additionally, hedge fund Manole Capital Management, recently called JPM’s gigantic size “a competitive advantage.
Despite all of JPM’s major, positive catalysts, its forward price-earnings ratio is a low ten times.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
