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12 Best Dow Stocks To Buy Right Now

In this article, we will take a look at 12 best Dow stocks to buy right now. If you want to see some more of the best Dow stocks to buy, go directly to the 5 Best Dow Stocks To Buy Right Now.

The Dow Jones Industrial Average (DJIA) is a widely recognized stock market index comprised of 30 large publicly traded companies in the U.S., including Apple, Coca-Cola, and JPMorgan Chase & Co. These companies are industry leaders and reliable indicators of the U.S. stock market’s overall health.

The DJIA is a price-weighted index that uses a single share price of companies on the index, adjusted for stock splits and dividends. As a result, long-term investors should diversify their portfolios across different stocks and sectors and consider top Dow stocks like Johnson & Johnson (NYSE:JNJ), Merck & Co Inc. (NYSE:MRK), and Walmart Inc. (NYSE:WMT). The Dow Jones finished January 2023 up 2.8%, while the Nasdaq and S&P 500 gained 10.7% and 6.2%, respectively, as the market continued to rebound from mid-October lows.

The Dow Jones Industrial Average tends to have better average returns in March compared to February and is in the middle of the pack compared to other months, with a positive return 58% of the time in the last century, 64% in the last 50 years, and 65% over the previous 20 years.

In March 2023, the S&P 500 gained 3.51%, the Nasdaq gained 6.69%, and the Dow gained 1.89%. The month was marked by volatility due to the failure of two regional banks, a forced takeover of Credit Suisse, and deposit flight from smaller institutions.

April historically has been the top month for returns in the Dow Jones Industrial Average, with gains of 1.9% going back to 1950. April historically has been a good month for the stock market, attributed to the end of tax season and optimism for second-quarter earnings.

Dow stocks are seen as a safe haven amidst rising interest rates, high inflation, and a gloomy GDP forecast. They are favored by hedge funds and billionaire investors. Investors looking to buy the best Dow stocks right now may consider companies that have shown consistent growth over the past few years, as well as those that have a strong financial position and a promising future outlook.

Our Methodology

We scanned the 30 stocks in the Dow index and picked 12 stocks with highest number of hedge fund investors. We gauged hedge fund sentiment around stocks using Insider Monkey’s database of 943 hedge funds and their holdings.

Best Dow Stocks To Buy Right Now

12. American Express Co (NYSE:AXP)

Number of Hedge Fund Holders: 71

American Express Company (NYSE:AXP) offers charge/credit cards and travel services globally. Its stock price rose 79.47% in the last five years, surpassing the S&P 500.

Morgan Stanley’s Betsy Graseck raised American Express Company (NYSE:AXP) to ‘Overweight’ from ‘Equal Weight’ with a target price of $186, naming it as the top pick in consumer finance. The firm favors stocks with high credit quality, sustainable revenue growth, and positive operating leverage.

As of the fourth quarter of 2022, 71 hedge funds in Insider Monkey’s database held stakes in American Express Company (NYSE:AXP). The most prominent shareholder in American Express Company (NYSE:AXP) is Berkshire Hathaway, with 151.6 million shares valued at $22.40 billion.

11. Goldman Sachs Group Inc (NYSE:GS)

Number of Hedge Fund Holders: 74

Goldman Sachs Group (NYSE:GS) provides financial services to various entities globally. Given its expertise in trading and investment banking, G.S. could benefit from the growth of the broader market and increased demand for asset management. At a Forward P/E ratio of 8.95x compared to the industry average of 11.94x, Goldman Sachs Group (NYSE:GS) offers a potential investment opportunity.

Goldman Sachs Group (NYSE:GS) has a ‘Moderate Buy’ consensus rating with 11 buy ratings, 6 hold ratings, and no sell ratings. Based on the Wall Street analysts’ 12-month price targets issued, the average price target is $407.26, indicating a potential 24.50% increase from the current price of $327.11. The highest price target is $495.00, and the lowest is $332.00.

At the end of the fourth quarter of 2022, 74 hedge funds in the database of Insider Monkey held stakes worth $4.90 billion in Goldman Sachs Group (NYSE:GS), up from 69 in the preceding quarter worth $4.57 billion. Boykin Curry’s Eagle Capital Management, with 3.27 million shares, is the biggest stakeholder in the company.

In its Q3 2022 investor letter, Manole Capital Management stated the following about the Goldman Sachs Group Inc (NYSE:GS):

“Back in 2019, The Goldman Sachs Group, Inc. (NYSE:GS) made a splash in the card industry by working with Apple and MasterCard on a credit card. The actual card is fairly sleek (as you can see below), as customers names are etched into an Apple titanium card. The no-fee card generated a lot of hype, as many early users were quick to post their latest card on various social media sites….” (Click here to read the full text)

10. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 74

The Procter & Gamble Company (NYSE:PG) sells everyday necessities with leading market shares, such as razors, with over 60% of the global market.

The Procter & Gamble Company (NYSE:PG) has a ‘Strong Buy’ consensus rating with an average price target of $157.38, representing a 5.84% increase from the current price of $148.69. The price targets range from $141.00 to $170.00, based on 12 buy and 4 hold ratings.

Hedge funds tracked by Insider Monkey having stakes in The Procter & Gamble Company (NYSE:PG) increased to 74 in Q4 from 69 in the preceding quarter. These stakes hold a consolidated value of $4.72 billion. Bridgewater Associates is a significant shareholder in the company, with 4.99 million shares valued at $757.14 million.

In its Q4 2022 investor letter, Rowan Street Capital cited The Procter & Gamble Company (NYSE:PG). Here is what the fund said:

“Let’s look at The Procter & Gamble Company (NYSE: P.G.). Dividend yield is 2.4%. Earnings are forecasted to grow at 5.9%, and its current earnings multiple is at 25x. Now, let’s say over the next 3-5 years the market loses interest in the “safe”, mature companies that grow at anemic rates and gets an appetite for growth again. It’s very unlikely that Mr. Market will be paying 25x for 5.9% earnings growth. Lets assume that multiple declines to the market average of 18x — that would be ~6.9% drag per year on the total expected return over next 3-5 years. If we get 2.4% (dividend) + 5.9% (earnings growth) – 6.9% (decrease in earnings multiple) = 1.4% (annual return we can expect on average from this stock).”

9. Merck & Co Inc. (NYSE:MRK)

Number of Hedge Fund Holders: 77

Merck & Co Inc. (NYSE:MRK) is one of the top global drug manufacturers, with a market cap of $270.08 billion as of April 3. Its product portfolio includes Keytruda, Gardasil, Lagevrio, Januvia/Janumet, Proquad, Bridion, and Lynparza.

Merck & Co Inc. (NYSE:MRK) is rated as ‘Moderate Buy’ with an average price target of $119.20, indicating a 12.04% increase from the current price of $106.39. The highest analyst price target is $130.00, and the lowest forecast is $96.00. There are 14 buy ratings and 7 hold ratings for the stock.

At the end of Q4, 77 hedge funds were long Merck & Co Inc. (NYSE:MRK), compared to 82 funds in the prior quarter. Among these hedge funds, AQR Capital Management is Merck & Co Inc. (NYSE:MRK)’s most noticeable stakeholder, with 3.11 million shares worth $344.9 million.

In its Q4 2022 investor letter, Aristotle Capital Management, LLC stated the following about Merck & Co Inc. (NYSE:MRK):

“Founded in 1891 and headquartered in New Jersey, Merck & Co., Inc. (NYSE:MRK) is one the world’s largest pharmaceutical firms. The company’s drugs are used to treat conditions in a variety of areas, including oncology (~38% of revenue), vaccines (~19%), diabetes (~11%), animal health (~11%) and other (~21%). Merck produced over $48 billion in sales in 2021, just under half of which were generated in the United States. Within oncology, the firm’s immuno-oncology platform is becoming a major contributor to overall sales, driven by the blockbuster1 drug Keytruda. The company’s vaccine business is also significant and includes Gardasil for the prevention of HPV (the disease that can lead to cervical cancer in women), as well as vaccines for hepatitis B, pediatric diseases and shingles. In recent years, Merck has been shifting its focus toward unmet medical needs in specialty-care areas. As part of this shift in focus, in June 2021, Merck received $9 billion from the spinoff of its women’s health, established brands, and biosimilars businesses into the now independent, publicly traded company Organon…” (Click here to read the full text)

8. Johnson & Johnson (NYSE:JNJ)

Number of Hedge Fund Holders: 84

Johnson & Johnson (NYSE:JNJ) is a global healthcare company that develops, manufactures, and sells various products.

On March 29, UBS initiated coverage of Johnson & Johnson (NYSE:JNJ) with a ‘Neutral’ rating and a $164 price target in a U.S. Medical Supplies and Devices sector note. The firm believes the company’s 2023 and 2024 EPS and sales estimates are conservative but has low visibility into the near-term sales outlook due to STELARA LOE, which puts approximately 10% of sales at risk starting late 2023.

In the fourth quarter of 2022, 84 hedge funds monitored by Insider Monkey reported holding stakes in Johnson & Johnson (NYSE:JNJ). The total value of these holdings is around $5.57 billion. Johnson & Johnson (NYSE:JNJ) stands eighth on the list of 12 best Dow stocks to buy right now. With 3.57 million shares worth $630.27 million, Ray Dalio’s Bridgewater Associates is Johnson & Johnson (NYSE:JNJ)’s notable stakeholder in Q4 2022.

7. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 99

The Walt Disney Company (NYSE:DIS), a global entertainment company, experienced operating losses in its streaming services last year, resulting in a 27.75% drop in shares. With the return of former CEO Bob Iger, cost-saving measures have been implemented, and the company plans to improve the guest experience in its parks, experiences, and products unit. Focusing on core brands and franchises like Star Wars, Avatar and the Marvel Cinematic Universe has driven engagement and sales. Despite pandemic effects, Disney’s restructuring and cost-saving program are expected to make it more efficient and profitable in the future. Disney stock has risen 3.09% in the past six months, making it a good long-term investment.

The Walt Disney Company (NYSE:DIS) is a ‘Strong Buy’ with 17 buy ratings and an average price target of $128.41, representing a 28.24% increase from the current price of $100.13. The highest price target is $141.00, and the lowest is $110.00.

According to Insider Monkey’s data, The Walt Disney Company (NYSE:DIS) was part of 99 hedge fund portfolios at the end of Q4 2022, compared to 112 in the Q3 2022. Trian Partners is the biggest stakeholder of The Walt Disney Company (NYSE:DIS), with 9.03 million shares worth $784.51 million.

Meridian Funds made the following comment about The Walt Disney Company (NYSE:DIS) in its Q4 2022 investor letter:

“Global entertainment giant The Walt Disney Company (NYSE:DIS) lagged the market as results in its theme park business missed expectations, due in part to recession-wary consumers and the continued pandemic-related shutdown of its resort in Shanghai. In addition, investor uncertainty around the long-term profitability of its streaming business continued, although Disney rolled out price increases and an advertising-supported tier of its Disney+ subscription service during the quarter. The company also changed its leadership, bringing former CEO Bob Iger back to the top job. While disappointed with the stock’s recent performance, we intend to stay patient as the company’s broad reservoir of iconic brands and related franchises provide multiple avenues for long-term value creation. In our view, the broader market continues to underestimate Disney’s franchise value and its earnings power.”

6. JPMorgan Chase & Co (NYSE:JPM)

Number of Hedge Fund Holders: 100

JPMorgan Chase & Co (NYSE:JPM) benefits from consolidation in the U.S. banking sector as it scoops up customers leaving Silicon Valley Bank and other small banks. The company’s stock is a good value, with a P/E ratio of 9.78x. It also pays an annual dividend yield of 3.07%. JPMorgan Chase & Co (NYSE:JPM) is likely to emerge as one of the strongest banking plays on the market, and its position as the largest bank in the U.S. was highlighted when it deposited billions into First Republic Bank (NYSE:FRC).

JPMorgan Chase & Co (NYSE:JPM) is currently rated as a ‘Moderate Buy’ by analysts, with 11 buy ratings and 4 hold ratings. The average price target for the stock is $153.73, with a high target of $189.00 and a low of $120.00. This suggests a potential increase of 17.97% from the current price of $130.31.

Hedge fund interest in JPMorgan Chase & Co (NYSE:JPM) has lately decreased. JPMorgan Chase & Co (NYSE:JPM) was in 100 hedge funds’ portfolios at the end of the fourth quarter of 2022, down from 110 funds a quarter earlier. Greenhaven Associates, with 4.80 million shares, is the biggest stakeholder in the company.

Along with Johnson & Johnson (NYSE:JNJ), Merck & Co Inc. (NYSE:MRK), and Walmart Inc. (NYSE:WMT), JPMorgan Chase & Co (NYSE:JPM) is one of the Dow stocks on the radar of the investors.

In its Q3 2022 investor letter, Vltava Fund stated the following about JPMorgan Chase & Co. (NYSE:JPM):

“We regard JPM to be the strongest and best- managed bank in the world. It is a leader in investment banking, commercial banking, credit cards, and asset management. Its size (the largest bank in the USA, with nearly USD 4,000 billion in assets) and diversification give it a strong competitive advantage that is compounded by its cost advantages and the high costs to clients associated with switching banks. JPM’s management prides itself on running the only large bank to avoid major instability over the long term.

JP Morgan’s quality and strength first became fully evident in 2008 under the leadership of its CEO Jamie Dimon. Not only did JP Morgan help to stabilize the market by taking over the failing Bear Stearns in the spring of that year, but throughout the Great Financial Crisis it was the only big U.S. bank that did not require government assistance and it was highly profitable even in the difficult year of 2008.

A well-functioning and efficient bank can be a very good long-term investment, because the interest compounding effect works well here. JPM’s return on equity (ROE) is well into the double digits and this puts it in a good position to continue producing better long-term returns than does the market. JPM has been very profitable even during years when interest rates were close to zero. The current – and perhaps not temporary – return to somewhat more normal, higher interest rates should have a significantly positive impact on the bank’s interest income and overall profitability.”

Click to continue reading and see 5 Best Dow Stocks To Buy Right Now.

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Disclosure: None. 12 Best Dow Stocks To Buy Right Now is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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The “Toll Booth” Operator of the AI Energy Boom

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A New Dawn is Coming to U.S. Stocks

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Should I put my money in Artificial Intelligence?

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Click to continue reading…