The Dow Jones Industrial Average hit an all-time high on Monday. And analysts think you haven't seen the end of the gains — if you look in the right places.
Ten Dow stocks, including Nike, Walt Disney and Boeing, are likely to gain 14% or more in the next 12 months, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. That's a larger gain than expected from any other Dow stocks. It's also 40% greater than the 10% gain forecast for the average Dow stock over the next year.
Seeing a comeback in Dow stocks, beyond just the beloved large-cap tech sector, would be an overdue shift, says Sam Stovall of CFRA. "At the start of last week, investors were thinking that something's gotta give, as a result of market concentration and valuation concerns," he said.
Dow Comes Alive
Dow stocks, especially in financials, are perking up. And it's about time.
The Dow is now up just 6.7% this year. That means it's trailing the S&P 500's 18% rise. The S&P 500 is getting a huge lift from its market-cap weightings of giant tech stocks. But the Dow's weight is based on per-share stock prices. That means UnitedHealth and Goldman Sachs hold the largest weights in the Dow. Both stocks are lagging the S&P 500 this year.
But hope springs eternal in the Dow. And analysts are picking their favorite stocks in the widely followed average.
Just Do It! Analysts Love Nike And Disney
When it comes to the Dow stocks analysts like the most, there's no debate.
They're calling for a more than 30% rally in shares of Nike in 12 months. That would be the largest rise in the Dow. Nike is a bit of a surprising call. Shares are off more than 34% this year as trendier brands steal market share. The company's May quarter revenue missed targets by around 2%.
And analysts are forecasting a rebuilding year at the athletic apparel maker. Revenue and earnings are seen dropping roughly 5% and 2% this fiscal year, respectively. But it seems analysts think Nike's shares more than adequately reflect the slowdown.
Disney is another top pick in the Dow. Analysts think the entertainment giant's shares, up 7% this year, will rise another nearly 29% in 12 months. That would be a welcome improvement for a long-lagging stock. And unlike with Nike, analysts see a pretty good year coming. They think earnings this fiscal year will rise more than 26% on 3% higher revenue.
Is it time for the Dow stocks to finally join the S&P 500's rally? "We just don't know when," said Stovall. "But as Brook Benton once sang, 'It's just a matter of time.' "
Analysts' Favorite Dow Stocks
Based on 12-month price targets
| Company | Ticker | Upside to target | Sector |
|---|---|---|---|
| Nike | 30.6% | Consumer Discretionary | |
| Walt Disney | 28.5% | Communication Services | |
| Boeing | 21.9% | Industrials | |
| McDonald's | 21.5% | Consumer Discretionary | |
| Salesforce | 19.0% | Information Technology | |
| Chevron | 15.4% | Energy | |
| Visa | 15.1% | Financials | |
| Johnson & Johnson | 15.1% | Health Care | |
| Amazon.com | 14.6% | Consumer Discretionary | |
| Dow | 14.2% | Materials |
