3 Dow Stocks to Buy Now: Q2 Edition


  • Dive into these compelling Dow stocks to buy now.
  • Chevron (CVX): Chevron’s integrated oil business practically sells itself now.
  • Merck (MRK): Merck’s pharmaceutical business may offer insulation from the troubles.
  • Caterpillar (CAT): Caterpillar could see downwind benefits from a rising gold and oil market.
Dow Stocks to Buy Now - 3 Dow Stocks to Buy Now: Q2 Edition

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Let’s be real – the narrative for Dow stocks to buy now tends to be one of relative safety. What are the chances that the 30 companies of the Dow Jones Industrial Average will be the most exciting ideas of any given year? I’d say quite low.

However, circumstances can always change, as we’ve seen in the geopolitical environment. Following Iran launching missiles against Israel in retaliation for allegedly bombing its embassy in Syria, the world is on edge regarding Israel’s likely response. What adds to the concerns is that the globe is clearly divided along sharp ideological lines.

Under this backdrop, it may be prudent to go with the stalwarts. With that, below are the Dow stocks to buy now.

Chevron (CVX)

Chevron (CVX) logo on gas station sign with "diesel" and "food mart" written underneath
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Frankly, the case for integrated oil giant Chevron (NYSE:CVX) really sells itself. Even before the geopolitical framework became accelerated, Chevron was one of the top Dow stocks to buy now. With crude oil prices rising and electric vehicle sales struggling due to high prices among other headwinds, the combustion-powered narrative enjoyed a cynically positive backdrop. Of course, the latest crisis helps lift the narrative.

What it boils down to is that Israel, in its bid to maintain credibility, will likely strike Iran back. However, the problem here is that Iran has allies, namely Russia. As well, the Chinese has demonstrated that it will not back away from relations with the Middle Eastern nation. Therefore, any response could lead to a serious escalation, which could easily impact global oil supply chains.

Now, looking at analysts’ projections for the current fiscal year, they’re not encouraging. Earnings per share of $12.86 on sales of $196.66 billion represents a decline from last year’s $13.13 EPS on revenue of $200.95 billion. However, these projections probably need to be upgraded based on present realities. Make no mistake – CVX is likely a credible candidate for Dow stocks to buy now.

Merck (MRK)

A photo of a large concrete Merck & Co Inc (MRK) sign outside a building.
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Amid the geopolitical rancor, it’s nice to target ideas that may be insulated from such dynamics. That’s why Merck (NYSE:MRK) could be an intriguing idea for Dow stocks to buy now. As a pharmaceutical giant, it has no apparent connection to international relations. More importantly, Merck covers a range of health concerns, including oncology, immunology, neuroscience and cardiovascular, among others.

In other words, irrespective of whatever happens in the geopolitical theater, MRK stock commands high relevance. For instance, Merck features therapeutics and programs for diabetes and improving access to high-quality diabetes care. Since that’s a treatment area that features significant demand and solid growth, Merck should be insulated from the troubles. And that’s a huge positive because playing the geopolitical angle is often risky and unpredictable.

For the current fiscal year, experts are anticipating EPS to land at $8.56 on sales of $63.8 billion. On the bottom line, that’s a huge improvement over last year’s EPS of $1.51. On the top line, the projected revenue implies a growth rate of 6.1%.

Caterpillar (CAT)

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To be completely upfront from the get-go, Caterpillar (NYSE:CAT) is the riskiest idea on this list of Dow stocks to buy now. It’s understandable. As a farm and heavy construction machinery giant, Caterpillar depends on a robust global economy. That framework is not quite reliable at this moment. Sure, we’re doing relatively well but many other countries can’t say the same.

Another challenge is inflation. As great as our jobs market has been, more dollars are chasing after fewer goods. That could crimp Caterpillar’s business. So, why consider CAT to be one of the Dow stocks to buy now? Simply, I think the gold-mining industry – along with the hydrocarbon energy market – could see increased activity. And that would potentially translate to higher growth.

Both gold and oil could rise on elements related to the fear trade. While I understand that the projected fiscal 2024 revenue only calls for 0.3% year-over-year growth to $67.25 billion, this forecast could change if the aforementioned markets swing higher. It’s speculative but it’s arguably worth a shot.

On the date of publication, Josh Enomoto 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.

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. Tweet him at @EnomotoMedia.

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