In this article, we will take a look at the 10 Dow Jones Stocks to Buy According to Hedge Funds.
The Dow Jones Industrial Average Index (DJIA), commonly referred to as the Dow Jones, is a stock market index of 30 prominent and leading Blue-Chip companies listed on the stock exchanges in the United States. It is one of the oldest and most commonly followed equity index that was launched on May 26, 1896. The index uses a price-weighted method and covers all industries except transportation and utilities.
Since the index uses a price-weighted measure for weighting its component stocks, the stocks with higher prices are given greater weight in the index, as compared to the stocks with lower prices. This results in a higher impact on the index values from changes in higher-priced components. As of September 19, 2022, Health Care, Information Technology, and Financials had the highest weight allocation at 21.4%, 20.09%, and 16.29%.
There are multiple exchange traded funds (ETFs) that track the DJIA Index. SPDR Dow Jones Industrial Average ETF Trust is one of the most prominent ETF tracking the DJIA Index. As of June 30, 2022, the Index had an annualized total return of 11.70% over the course of last 10 years, a dividend yield of 2.21%, and an average market cap of approximately $395 billion.
Some of the notable members of the DJIA include Walmart Inc. (NYSE:WMT), Goldman Sachs Group, Inc. (NYSE:GS), Apple Inc. (NASDAQ:AAPL), Microsoft Corporation (NASDAQ:MSFT), The Boeing Company (NYSE:BA), and Visa Inc. (NYSE:V), among others.
Given the markets have been volatile with the Federal Reserve raising rates, stocks could decline if economic data doesn’t meet expectations. Nevertheless, there’s also opportunity for long term investors who buy quality blue chip stocks.
Francisco Amaral Leitao / shutterstock.com
Methodology
We took 10 Dow Jones stocks, and we sorted them based on the number of hedge funds in our database that owned shares in the stock at the end of Q2 2022.
10 Dow Jones Stocks to Buy According to Hedge Funds
10. Travelers Companies, Inc. (NYSE:TRV)
Number of Hedge Fund Holders: 31
Travelers Companies, Inc. (NYSE:TRV) is a leading provider of property casualty insurance for auto, home, and business. It offers its services primarily through independent agents and brokers and employs nearly 30,000 personnel across the United States and select international markets.
In July, the board of directors of Travelers Companies, Inc. (NYSE:TRV) declared a quarterly cash dividend of $0.93 per share. Travelers Companies, Inc. (NYSE:TRV) has a strong dividend history with 19 years of consecutive dividend raises. Given a forward payout ratio of 25.2% and earnings growth estimates, the company could raise its dividend again next year.
As of Q2 2022, 31 out of the 895 hedge funds tracked by Insider Monkey were bullish on Travelers Companies, Inc. (NYSE:TRV) and held its shares valued at $434 million. First Eagle Investment Management was the largest shareholder holding 3.1 million shares valued at $523 million.
Alongside Salesforce, Inc. (NYSE:CRM), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT), Travelers Companies, Inc. (NYSE:TRV) is a Dow Jones stock widely owned by hedge funds in our database at the end of Q2 2022.
9. Honeywell International Inc. (NYSE:HON)
Number of Hedge Fund Holders: 42
Charlotte, North Carolina-based Honeywell International Inc. (NYSE:HON) is a multinational conglomerate with a focus on providing solutions across aerospace, building technologies, performance materials & technologies, and safety & productivity solutions.
In July, Honeywell International Inc. (NYSE:HON) released the financial results for Q2 2022. Its total revenue increased by 2% y-o-y to $8.95 billion, while its net income declined by 13% y-o-y to $1.3 billion, for three months ended June 30, 2022. It reported a normalized EPS of $2.10, beating the consensus by $0.07.
Following the earnings release, Citi analyst Andrew Kaplowitz raised the price target for Honeywell shares to $222 from $211 and maintained a ‘Buy’ rating.
As of Q2 2022, 42 hedge funds out of the 895 hedge funds tracked by Insider Monkey held shares of Honeywell International Inc. (NYSE:HON), valued at $1.0 billion. Its largest shareholder was D E Shaw with ownership of 1.3 million shares valued at $220 million.
8. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 54
Saint Paul, Minnesota-based 3M Company (NYSE:MMM) is a diversified technology company with a global presence in the following businesses: Safety and Industrial; Transportation and Electronics; Health Care; and Consumer.
In September, 3M Company (NYSE:MMM) announced that it had finalized the separation of its food safety business through a merger with Neogen Corporation (NASDAQ:NEOG). As part of the transaction, 3M Company (NYSE:MMM) will receive approximately 50.1% of the combined company, with the remaining shares held by existing Neogen shareholders.
On September 9, 2022, UBS analyst Chris Snyder increased the price target on 3M Company (NYSE:MMM) shares to $126 from $118 and upgraded the rating to ‘Neutral’ from ‘Sell’.
As of Q2 2022, 54 of the 895 hedge funds tracked by Insider Monkey owned shares of 3M Company (NYSE:MMM), valued at $1.4 billion. Its largest shareholder was Ken Fisher’s Fisher Asset Management with ownership of 6.2 million shares valued at $802 million.
7. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Bentonville, Arkansas-based Walmart Inc. (NYSE:WMT) is a leading global discount retailer operating more than 10,500 stores and clubs under 46 banners in 24 countries and eCommerce websites.
Walmart Inc. (NYSE:WMT) is one of the largest companies in the world with economies of scale and financial resources. Given its growth, Walmart Inc. (NYSE:WMT) has also increased its dividend for 49 consecutive years. With a forward payout ratio of 38.33% and analyst estimating the company to earn even more money next year, Walmart Inc. (NYSE:WMT) will likely continue to raise its dividend next year.
As of Q2 2022, 67 of the 895 hedge funds tracked by Insider Monkey were long Walmart Inc. (NYSE:WMT), holding shares worth $3.8 billion. Its largest hedge fund shareholder is GQG Partners with ownership of 9.8 million shares valued at $1.2 billion.
6. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 67
American Express Company (NYSE:AXP) is a globally integrated payments company focused on card-issuing, merchant-acquiring, and card network businesses. It provides payment products and services to consumers, small businesses, mid-sized companies, and large corporations around the world. It had 71.4 million proprietary cards-in-force worldwide, as of December 31, 2021.
American Express Company (NYSE:AXP) released the financial results for the quarter ended June 30, 2022, in July. Its total net revenue increased by 20% y-o-y to $13 billion, while its net income shrunk by 14% y-o-y to $2 billion. It reported a normalized EPS of $2.57 for the quarter, beating the consensus by $0.16. It declared a cash dividend of $0.52 per share for the quarter, bringing the dividends for first half of 2022 to $1.04 per share.
As of Q2 2022, 67 of the 895 hedge funds tracked by Insider Monkey owned shares of American Express Company (NYSE:AXP), valued at $25.2 billion. Warren Buffet’s Berkshire Hathaway is its largest shareholder with ownership of 151.6 million shares valued at $21 billion.
Like American Express Company (NYSE:AXP), Salesforce, Inc. (NYSE:CRM), Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) are Dow Jones stocks widely held by hedge funds in our database at the end of Q2 2022.
5. Goldman Sachs Group, Inc. (NYSE:GS)
Number of Hedge Fund Holders: 69
Goldman Sachs Group, Inc. (NYSE:GS), based in New York, is a leading global financial institution that provides financial services across investment banking, securities, investment management and consumer banking to a large and diversified client base that includes corporations, financial institutions, governments, and individuals.
In July, Goldman Sachs Group, Inc. (NYSE:GS) released its financial results for the quarter ended June 30, 2022. Its total net revenues decreased by 23% y-o-y to $11.9 billion, while its net earnings dipped by 47% y-o-y to $2.9 billion, for the three months. The normalized EPS was recorded at $7.73 per share, exceeding the consensus by $1.17.
In September, Deutsche Bank analyst Matt O’Connor lowered the price target on Goldman Sachs Group, Inc. (NYSE:GS) shares to $370 from $430 and maintained a ‘Hold’ rating on the shares.
As of Q2 2022, 69 of the 895 hedge funds tracked by Insider Monkey owned shares of Goldman Sachs Group, Inc. (NYSE:GS), valued at $4.6 billion. Boykin Curry’s Eagle Capital Management is its largest shareholder with ownership of 3.4 million shares valued at $1.0 billion.
4. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 109
Based in Burbank, California, Walt Disney Company (NYSE: DIS) is a worldwide entertainment company operating across Media and Entertainment Distribution, and Parks, Experiences and Products segments. It operates 6 resort destinations with 12 theme parks and 53 resorts in the US, Europe, and Asia; a cruise line with 4 ships; a beach resort in Hawaii; vacation ownership program; and two guided tour adventure businesses. The company is also home to entertainment brands such as ESPN, Disney+, Hulu, Marvel Studios, and National Geographic, among others.
As of Q2 2022, 109 hedge funds tracked by Insider Monkey held shares of Walt Disney Company (NYSE: DIS), worth $3.2 billion. Ken Griffin’s Citadel Investment Group is its largest hedge fund shareholder.
Here is what Oakmark Fund had to say about The Walt Disney Company (NYSE: DIS) in its Q2 2022 investor letter:
“Disney (NYSE:DIS) is one of the most beloved consumer companies in the world. Its media business has a rich library of intellectual property, which provides a powerful engine for creating new content across the Disney, Pixar, Marvel, and Star Wars brands. This content also contributes to the success of Disney’s theme parks, which generated nearly half the company’s earnings and grew more than 10% annually in the decade prior to the pandemic. Shares have fallen nearly 50% over the past year as investors worried about the company’s ability to transition its media business to a direct-to-consumer streaming world. This transition has required management to make investments in its Disney+ streaming service that are depressing profitability today. However, we believe these investments will ultimately produce attractive returns as Disney+ continues to grow subscribers and increase pricing over time. As a result, we were able to purchase shares at a substantial discount to our estimate of intrinsic value.”
3. Salesforce, Inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
San Francisco, California-based Salesforce, Inc. (NYSE:CRM) is the world’s leading customer relationship management platform provider. Its cloud-based platform has applications for sales, service, marketing, and more, with more than 150,000 companies using the platform.
According to the Insider Monkey data on 895 leading hedge funds, 116 hedge funds were long Salesforce, Inc. (NYSE:CRM) shares as of Q2 2022, with the total shares held by hedge funds valued at $7.9 billion. Ken Fisher’s Fisher Asset Management was the largest shareholder on record with ownership of 15.7 million shares valued at $2.6 billion.
This is what Eagle First Investments had to say about Salesforce, Inc. (NYSE:CRM) in its Q2 2022 investor letter:
“Salesforce is a prime example of our big-tent approach to value investing. Though the US-based provider of cloud-based customer-relationship management (CRM) software would be considered a growth stock by many metrics, we believe its profile is suggestive of a business with unrecognized franchise value that may make for an attractive investment opportunity at an appropriate “margin of safety.” Salesforce has a dominant market position in the CRM space, especially in a cloud segment that by our estimate has been growing at approximately 20% per year as enterprises increasingly embrace the benefits of software-as-a-service. Recent years have seen the company prudently adapt its offerings through organic product extensions and expand into adjacent verticals through acquisition while migrating toward an integrated CRM platform model. Salesforce’s mature, durable market position, track record of cash flow generation and well-aligned management team gives us confidence that it possesses identifiable franchise value—in contrast with many of its peers in the technology space, whose investors often are paying for unrealized earnings and early-stage business development strategies.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a leading technology company focused on the designing, manufacturing, and marketing of smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services.
Major products of Apple Inc. (NASDAQ:AAPL) include the iPhone, Mac PCs, iPad, and accessories while service offerings include Apple Care, Cloud Services, Digital Content and Payment services. iPhone sales accounted for more than half of its revenue in the last fiscal year. The company announced the launch of iPhone 14 in the first week of September which could result in a surge in the company’s revenue.
In July, Apple Inc. (NASDAQ:AAPL) released its financial results for the quarter ended June 25, 2022. Its net sales increased by 2% y-o-y to $83 billion, while its net income declined by 11% y-o-y to $19.4 billion, for the three months. It reported a normalized EPS of $1.20 for the quarter, beating the consensus by $0.05. Apple Inc. (NASDAQ:AAPL) declared a regular cash dividend of $0.23 per share for the quarter.
Apple Inc. (NASDAQ:AAPL) is among the favorites of hedge funds, with 128 of the 895 hedge funds tracked by Insider Monkey holding its shares valued at a whopping $143 billion. Warren Buffet’s Berkshire Hathaway is its biggest shareholder with ownership of 894.8 million shares valued at $122.3 billion.
1. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 258
Redmond, Washington-based Microsoft Corporation (NASDAQ:MSFT) is a leading technology company with products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. Microsoft Corporation (NASDAQ:MSFT) boasts over 1.4 billion monthly active devices running its flagship operating system, Windows 10 or 11.
Earlier this year, Microsoft agreed to acquire Activision Blizzard, Inc. (NASDAQ:ATVI) in an all-cash transaction valued at $68.7 billion. The proposed acquisition, if completed, is expected to accelerate growth in Microsoft’s Gaming business across mobile, PC, console, and cloud. The acquisition could also help Microsoft Corporation (NASDAQ:MSFT) gain market share in the metaverse market, which is expected to grow substantially in the next ten years.
As of Q2 2022, Microsoft Corporation (NASDAQ:MSFT) is the most sought-after stock among the 895 hedge funds tracked by Insider Monkey as 258 of these hedge funds held shares in the software giant, valued at $56 billion. Fisher Asset Management was the largest shareholder in the company owning 28.7 million shares valued at $7.4 billion.
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Disclosure: None. 10 Dow Jones Stocks to Buy According to Hedge Funds is originally published on Insider Monkey.
