The Dow Jones Industrial Average encompasses 30 of America’s well-established industrial giants.
Most of them have made decent bets over the past five or more years. For the most part, Dow Jones stocks have followed the rally that the S&P 500 and Nasdaq Composite have experienced. That doesn’t mean there have not been any hiccups on the way. Markets continue to be quite volatile throughout 2024. In fact, after a solid first quarter rally, a sharp market sell-off impacted all the major indices in early April due to a higher-than-expected consumer price index (CPI) report. Bubbling doubts about the extent to which the U.S. equities rally could last was also a key factor in the selling pressure we saw in the beginning of the second quarter.
Into the third quarter, those doubts are still present in investors’ minds. Nonetheless, this could make a good opportunity to buy quality stocks. Let’s examine three Dow Jones stocks that are trading at 52-week lows.
Nike (NKE)
Like most (if not all) of the stocks on this list, Nike (NYSE:NKE) should not need an extensive introduction. The company designs and develops athletic footwear, apparel, equipment and accessories on a worldwide scale. Also, Nike provides athletic and casual footwear and apparel under a number of trademarks, including the Jumpman, Converse, Chuck Taylor, All Star, One Star, Star Chevron and Jack Purcell.
Inflation and elevated interest rates have made it difficult for Nike to grow revenue over the past year. In their fiscal year 2024 report, which ended on March 31st, sales grew a tepid 1% year-over-year (YOY). Sales for the fourth quarter, in particular, came in well below Wall Street’s estimates. In fact, quarterly sales declined 2% YOY to $12.6 billion. The guidance for the ongoing quarter was also not so bright. Nike expects revenue to decline 10% YOY as it pivots to new products. Some good news that could incite more sales growth could be the Summer Olympics in Paris, starting in August.
NKE shares are down nearly 31% over the past 12 months.
McDonald’s (MCD)
Fast-food chain McDonald’s (NYSE:MCD) is trading at a 52-week low. Inflation and macroeconomic uncertainty are definitely to blame here. Consumers have become selective about the way in which they spend their dollars. And while McDonald’s has surely benefitted from price growth over the last year, low-income customers have significantly pulled back their spending from the restaurant chain. Moreover, Middle Eastern boycotts of McDonald’s (a result of its position on the Israel-Gaza war) have also hurt sales.
Another factor contributing to downward pressure on McDonald’s share price has been the rise of weight-loss drugs. Over the past 12 months, Novo Nordisk (NYSE:NVO) has been in the media over its weight-loss drugs, Ozempic and Wegovy. There fear is, as these weight-loss drugs become readily available, fast food chains like McDonald’s will likely see a decrease in customer volume.
However, it will probably be a while until that reality materializes. MCD shares are down 11.8% over the past 12 months. And with the fast food chain trading at 20.6x forward earnings, the company deserves another look from long-term investors.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) has been core to networking and digital infrastructure for enterprises and public institutions for decades now. Through CSCO’s “Agile Networks” division, it sells switches and routers, which are some of the basic components that help private and public networks to run. Outside of these networking products, Cisco Systems builds several kinds of routers that are important for the modern-day servers that power cloud networks.
However, the problem for Cisco Systems has been much of its telecommunications provider customer base has been slow to upgrade their current equipment. Many telecom companies went on a buying spree a couple of years ago as supply chain constraints still were present globally. Now, those companies are sitting on a lot of equipment inventory that they need to digest. This isn’t good news for Cisco Systems, which hopes to sell newer cloud products to its customers. CSCO shares have fallen 6% over the last 12 months. The company also trades at 13.7x forward earnings.
The supply constraints in the telecom market will take time to subside but will eventually do so. This should entice investors to buy Cisco Systems now, especially as it trades at a low multiple.
On the date of publication, Tyrik Torres 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
