The Dow Jones Industrial Average has been on quite the applaud-worthy winning streak of late, with the timeless market index up for seven consecutive days between May 1 and Friday’s session. (The index did close slightly lower on Monday but was still up from Thursday.) The impressive Dow rally seems to show market breadth has been improving over the past week.
Though the technology sector remains robust, one can’t help but notice that some of the more speculative hyper-growth plays (especially the ones that aren’t yet profitable) have run into a brick wall after reporting their recent quarters.
Whether that’s a precursor to a rotation back to old-fashioned “value” plays, like many included within the Dow 30, remains to be seen. Regardless, investors seeking to lighten up on growth may wish to start with some blue chips within the Dow. Some of the relative laggards of the group may be diamonds in the rough worth stashing away for the long haul.
McDonald’s (MCD)
McDonald’s (NYSE:MCD) and most of the fast-food industry have been hit with serious volatility as lower-income consumers put off by prices opt to eat elsewhere (likely from home). The company’s top boss, Chris Kempczinski, said he and his team are “laser-focused” on improving upon the value proposition it may have been known for in the past (at least before inflation hit), and investors would have been wise to take his word for it.
On Friday, the stock popped 2.6% after Bloomberg revealed that McDonald’s has an impressive $5.00 value menu in the works. Such a menu may include the McChicken or McDouble. That’s the kind of value proposition that will be very hard to beat. And such a deal may be the perfect weapon to take massive market share from rivals. Despite the pop, MCD stock is still down 8% year to date.
The only thing richer with value than McDonald’s new $5.00 meal deal may be the stock, which goes for just 23.3 times trailing price-to-earnings. The 2.5% dividend yield also looks quite tasty.
Intel (INTC)
Just when you thought the tides were turning back in favor of Intel (NASDAQ:INTC) amid the AI boom, INTC stock proceeded to shed most of the gains enjoyed through 2023. Undoubtedly, it’s painful for Intel shareholders who didn’t take profits when they could after a remarkable relief rally of a year. Year to date, INTC stock is down 38%, making it the biggest 2024 loser (so far) for the Dow.
After news broke that Intel’s license to sell chips to Chinese smartphone maker Huawei had been revoked, it seemed like nothing could go right for the chipmaker as its turnaround efforts hit a pothole. At slightly more than $30 per share, I do think the Dow dog is worth stashing on the radar.
Though I won’t be a buyer quite yet, I do find expectations have come down substantially following its latest rough quarter, which included lower revenue guidance. Low expectations are always a good thing if you’re looking to buy on massive dips.
Cisco (CSCO)
Cisco (NASDAQ:CSCO) shares are down just shy of 4% year to date, but don’t count the networking equipment giant out quite yet. Looking ahead, Cisco CEO Chuck Robbins sounds like he’s ready to harness the power of AI.
Undoubtedly, there isn’t much to get excited about when looking under the hood of Cisco as it stands today. That said, Robbins seems to have his sights set on long-term growth, noting his firm is betting on what could be a “decade-long run with AI.” The plan is encouraging, but there’s quite a bit of room to cover if Cisco’s going to catch up with its tech rivals.
With a modest 14.6 times trailing P/E multiple, though, you’re getting a pretty compelling entry point. But do make sure you’re prepared to play the long game alongside Cisco, and are ready to ride out the bumps on the road as the nearer-term outlook remains less than impressive.
On the date of publication, Joey Frenette held shares of McDonald’s. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
