In this article, we are going to look at ten best Dow stocks to buy right now based on two key benchmarks. If you are eager to start investing right away, you can click to continue to the 5 Best Dow Shares to Buy Now.
The Dow Jones industrial average has been around for more than 120 years and is used for most of its existence as a measure of overall stock market health. In addition to the S&P 500, Dow Jones is also the most frequently cited financial measure, and is often used to describe the market, ie if some people refer to the rising or falling market, they use Dow’s performance.
The reason it is so popular is that Dow was actually designed as a benchmark index. In 1884, Charles Dow included 12 capitalized railroad companies and two industrial enterprises in his first index. His plan was to define an index that would track the performance of the U.S. economy. Over time, the Dow included more industrial stocks as the importance of the industrial sector increased. The first Dow Jones Industrial Average index was published in 1896 and included 12 industrial stocks. The 30-share version of the index with which we are familiar was introduced in 1928. The longest-running stock in the Dow was General Electric Company (NYSE:GE), which was included in the original 12-stock version until it was removed in 2018.
Although it contains only 30 stocks, the Dow Jones Industrial Average remains one of the most cited indices, as it contains some of the largest companies in the US. However, it does not include giants like technological behemoth Amazon.com, Inc. (NASDAQ: AMZN) and Alphabet Inc (NASDAQ: GOOG) in, and probably never will. The reason for this is that Dow Jones is a price-weighted index, so the higher the price of a stock, the more weight it has on the performance of the index. Right now, with the most expensive stock in the Dow, UnitedHealth Group Inc (NYSE: UNH), which is valued at about $ 340, and Amazon and Alphabet, which cost $ 3,200 and $ 1,700, have been added, will turn it in two. stock index.
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In fact, out of the five largest stocks in terms of capitalization (more than $ 1.0 billion), only two are included in the Dow. What’s more, most of the largest companies not included in the Dow are technology and internet giants, which actually reflect the shift the US economy has made since its earlier industrial days. Therefore, it is worth asking whether Dow is still the benchmark of the US economy, or is it outdated?
This may not reflect the US economy that has changed with technological advances, but Dow is far from obsolete. Although much smaller than its S&P 500 counterpart, the Dow watched the S&P 500 closely, but it was less volatile. Over the past five years, the S&P 500 has returned about 81% and the Dow Jones industrial average has risen by 74%.
So should you consider investing in Dow shares? This is certainly the case, as Dow companies are carefully selected and only the companies with the best reputation and strong finances are included in the index by a special committee. One approach to investing in Dow stocks is to buy stocks from an ETF such as SPDR Dow Jones Industrial Average ETF Trust (NYSEARCA: DIA). However, we have a better idea. We have selected a list of ten best Dow stocks to buy now, not only considering their performance over the past year, but also judging their popularity among hedge funds. This measure, called hedge fund sentiment, enables us to identify the stocks that perform best in the long run.
Our research covering the portfolios of more than 800 hedge funds has enabled us since March 2017 to identify a select group of equities that have outperformed the S&P 500 ETF (SPY) by more than 78 percentage points. We share our choice in our premium quarterly and monthly newsletters, which you can read more about by following this link. Also, be sure to subscribe to our free newsletter on our homepage to receive our latest insights and news.
So, with that in mind, let’s take a look at the top 10 Dow stocks to buy right now, based on their performance as well as their popularity among the hedge funds followed by Insider Monkey.
10. Walmart Inc (NYSE: WMT)
Our list starts with Walmart Inc (NYSE: WMT) in 10th place. At the end of the third quarter, 69 funds reported from our database that they owned $ 5.49 billion worth of shares, compared to 60 investors with $ 5.83 billion worth of shares three months earlier. Walmart’s stock has been a good investment for decades and so far 2020 has also been a success for its shareholders.
Walmart has risen more than 20% since the beginning of the year, as the company recorded significant sales growth amid the pandemic and barriers that scared people into piling up goods and demand for certain products. increased. In this way, Walmart reported revenue growth of nearly 9% and 6% for the quarters ending April and July 2020, respectively, which is impressive as the highest growth in the previous ten quarters was 4.2%. Another reason for the growth is the increasing online presence of Walmart, which is why we have included Walmart in our list of top 5 retail stocks to buy now.
Major shareholders of Walmart Inc (NYSE: WMT) include Bill & Melinda Gates Foundation Trust, Ken Fisher’s Fisher Asset Management and Cliff Asness’ AQR Capital Management. It’s also worth mentioning that billionaire Ray Dalio’s Bridgewater Associates added Walmart to its equity portfolio during the third quarter.
9. Home Depot Inc (NYSE: HD)
Even after a drop of more than 30% in March, Home Depot Inc (NYSE: HD)its share has risen by more than 22% since the beginning of the year. Home Depot recently acquired HD Supply, which was very well received by the street. Investors and analysts believe that the acquisition of $ 8.7 billion (or better yet, reintegration, because HD Supply was part of Home Depot until it was sold in 2007), the expansion of Home Depot into the Maintenance, Repair and Operations Market will expand. In addition, Home Depot benefits from the conclusions that are likely to emerge from the pandemic, and the trends for single-family homes that are likely to be established. As more businesses have expressed the possibility of making work from home a permanent option for their employees, more people are expected to opt for single-family homes because they offer more space and are generally a better option for families with children .
Home Depot Inc (NYSE: HD) owned 73 funds at the end of September, which fell by 12 during the quarter. However, the total value of positions held by these funds increased to $ 4.96 billion from $ 4.64 billion. Millionaire Ken Fisher’s Fisher Asset Management holds the largest position in Home Depot by the end of September, revealing a $ 1.82 billion position in its latest 13F filing.
8. Procter & Gamble Co (NYSE: PG)
With an annual return of 12.35%, Procter & Gamble Co (NYSE: PG) is one of the “worst” artists on this list. Nevertheless, among the investors followed by Insider Monkey, 75 funds reported that they owned Procter & Gamble Co (NYSE: PG) shares in the latest round of 13F submissions, with two in the quarter. Procter & Gamble Co. (NYSE: PG) reported 9% organic sales growth for the last quarter (ending September), more than double the 4% consensus estimate. Overall, PG had revenue of $ 19.32 billion for the quarter, beating the consensus estimate by more than $ 900 million, and the EPS of $ 1.63, better than the expected $ 1.42. Recently, analysts at Wells Fargo said that Procter & Gamble Co (NYSE: PG) could be a vivid stock with many upside due to the company’s effort to reorganize its portfolio and structure. Analysts also believe that PG could report sales in the next financial year, which will beat the estimates by $ 4.0 billion.
Andy Brown’s Cedar Rock Capital is the largest shareholder in Procter & Gamble Co. (NYSE: PG) among the funds in our database. In its latest 13F filing, it reveals a $ 1.53 billion position containing 11.03 million shares. Cedar Rock is followed by Nelson Peltz’s Trian Partners and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, with $ 1.41 billion and $ 1.19 billion respectively.
7. Nike Inc (NYSE: NKE)
In Nike Inc (NYSE: NKE) there were 75 funds that had $ 4.22 billion worth of shares at the end of September, compared to 71 investors with $ 2.60 billion worth of shares a quarter earlier. These investors include Fisher Asset Management, Gabriel Plotkin’s Melvin Capital Management, Nicolai Tangen’s Ako Capital and others.
Shares of Nike Inc (NYSE: NKE) have risen 39% since the beginning of the year, as the company first had a terrible quarter with sales significantly lower due to the close, but then successful to recover. For the fiscal fourth quarter, ending May, Nike reported an annual 38% drop in revenue to $ 6.31 billion, which also missed expectations by $ 948 million. At the same time, the company has a net loss of $ 0.51, significantly lower than the expected earnings of $ 0.04 per share. The following quarter, however, Nike recovered by generating revenue of $ 10.59 billion, which was almost equal to the value of the previous year, and which was $ 1.45 billion higher than expected. In the last quarter, Nike generated revenue of $ 11.24 billion, 9% higher than the year and $ 730 million above the consensus.
6. UnitedHealth Group Inc (NYSE: UNH)
Then there is UnitedHealthGroup Inc (NYSE: UNH), whose share has risen 16.51% since the beginning of the year. Recently, the healthcare company announced a partnership with Eli Lilly And Co (NYSE: LLY) to conduct a pragmatic study of bamlanivimab from the pharmaceutical company in high-risk patients infected with COVID-19. Bamlavimab is authorized for emergency use for COVID-19 patients who are at risk of developing a severe form of the virus. For the last quarter, UnitedHealthGroup Inc (NYSE: UNH) showed revenue of $ 65.11 billion, up 7.89%, and $ 1.15 billion higher than expected, while the EPS of $ 3.51 topped the estimate by $ 0.43. Overall, the company has reported solid revenue growth over the past few years, missing the quarterly estimates only four times since 2015.
Although the number of long-term funds in UnitedHealth Group Inc (NYSE: UNH) fell by seven to 89 in the third quarter, the total value of investors followed by us rose to $ 8.96 billion from $ 8. 33 billion. Among these funds, Stephen Mandel’s Lone Pine Capital and Eagle Capital Management of Boykin Curry are the largest shareholders of UnitedHealthGroup Inc (NYSE: UNH), which owns 3.95 million and 3.54 million shares, respectively.
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Disclosure: None. The 10 best Dow shares to buy now were originally published by Insider Monkey.
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