With the Dow Industrial Average underperforming the S&P 500 in 2023, now is a great time to consider the best Dow stocks to buy. The Dow, a benchmark index of 30 prominent companies, is often a barometer for strength of the U.S. stock market. Identifying these great companies can provide investors with significant gains in 2024.
While last year was certainly a great year for the overall stock market, seeking stable returns becomes paramount. As they often say, past performance is not indicative of future results. That is why investors should seek companies in the Dow who appear to be undervalued relative to their peers.
Now, here are the 3 best Dow stocks to buy in January 2024!
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is by far the most compelling Dow stock to buy for 2024. While the 2023 year saw the stock soar more than 60%, Microsoft is positioning itself to become the world’s most valuable company.
It is plain and simple, Apple’s (NASDAQ:AAPL) glory days are over, and Microsoft is coming to rain on its parade. Apple has enjoyed decades of robust growth, and has been at the forefront of technological innovation. Now, Microsoft is about to take over and its AI prospects are not something that investors should ignore.
Microsoft’s generative AI and Azure cloud strategy is just starting to get off the ground. AI tailwinds will contribute to robust revenue, FCF and EPS growth over the next decade. Once AI is fully integrated across its entire technology stack, Microsoft will be able to increase workloads and productivity for its customers. If there is one Dow stock to buy in 2024, Microsoft would be the number one ten times over.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) is one of the best Dow stocks to buy in January 2024. While shares have lagged the broader market in 2023, Cisco’s financial metrics have seen continuous improvements.
As one of the leading technology conglomerates in the United States, Cisco exemplifies leadership capabilities in the AI-powered cloud security race. At the tail end of September 2023, Cisco announced the acquisition of Splunk. The acquisition is expected to be cash flow positive, and accelerate revenue and gross margin expansion.
In their recent Q1 2024 financial results, Cisco delivered their strongest first quarter in the company’s history. Cisco’s revenue grew 8%, with GAAP EPS up 37% YOY. The company’s execution has contributed to strong operating leverage, with software revenue and product ARR seeing double digit growth. With a PE of 15, Cisco is among the best Dow stocks to consider for 2024.
JPMorgan Chase (JPM)
JPMorgan Chase (NYSE:JPM) is last, but not least one of the top Dow stock considerations for January 2024. As one of the largest banks in the world, JPMorgan Chase is clearing its path to a $1 Trillion market capitalization.
With the 2023 fiscal year coming to an end, JPMorgan stands as one of the most compelling Dow stocks to buy. The company has been enjoying favorable macroeconomic conditions, translating into higher revenue growth, profits and net interest income. This has positioned them into their best financial shape in the company’s history.
In Q3 2023, JPMorgan’s revenue swelled 23% YOY to $39.9 billion. Additionally, the company saw record net interest income of $22.9 billion. In the midst of higher interest rates and inflation, they were able to strengthen their liquidity and capitalize on the regional banking crisis. While growth may slow in FY24, JPM is still extremely cheap, and its fortress balance sheet makes it well positioned to weather any storm.
On the date of publication, Terel Miles did not have (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.
