In this article, we discuss 5 best Dow stocks to buy now. If you want to check out some more of the best Dow stocks to buy, go directly to 11 Best Dow Stocks To Buy Now.
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) develops, manufacturers and sells various products in the healthcare field globally. Given the company’s businesses, Johnson & Johnson (NYSE:JNJ) shares have only fallen around 5% year to date and the company trades at around a 15.37 forward P/E ratio. On 10/5 Joanne Wuensch of Citi cut her price target on Johnson & Johnson (NYSE:JNJ) to $198 from $201 but kept a ‘Buy’ rating on shares citing macroeconomic headwinds.
In the long term, Johnson & Johnson (NYSE:JNJ) still has growth potential and the stock also has a current attractive dividend yield of 2.78% as of 10/12.
4. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is one of the largest banks in the United States. Given the decline in the market, JPMorgan Chase & Co. (NYSE:JPM) shares have fallen 34.6% year to date. In terms of the U.S. economy, JPMorgan CEO’s Jamie Dimon isn’t particularly optimistic as he says that although the U.S. economy is actually “still doing well”, he thinks there are headwinds such as the impact of inflation, rising interest rates, and Russia’s war in Ukraine. As a result, there could be a recession in the United States and also the world in six to nine months from now.
If that happens, JPMorgan Chase & Co. (NYSE:JPM) write offs could increase and its earnings could decrease. Given JPMorgan Chase & Co. (NYSE:JPM)’s forward P/E ratio of 8.26 and its business strength, however, the stock could be attractive long term.
3. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 109
The Walt Disney Company (NYSE:DIS) is one of the world’s leading entertainment companies with both content production and distribution and also theme parks. Due to the market weakness, shares of The Walt Disney Company (NYSE:DIS) are down almost 40% year to date and now trade at a forward P/E ratio of 17.3. On 10/11/22, Kannan Venkateshwar of Barclays lowered his price target to $105 from $120 on the stock but kept an ‘Equal Weight’ rating. Despite the potential recession in the future and the poor performance, The Walt Disney Company (NYSE:DIS) remains attractive in the long term given its earnings power.
2. Salesforce.com, inc. (NYSE:CRM)
Number of Hedge Fund Holders: 116
Salesforce.com, inc. (NYSE:CRM) is a leading CRM cloud company. Given the weak market, shares of salesforce.com, inc. (NYSE:CRM) are down 44% year to date and trade at a forward P/E ratio of 25.05.
On September 22, Keith Bachman of BMO Capital cut his price target on salesforce.com, inc. (NYSE:CRM) to $190 from $207 but kept an ‘Outperform’ rating. Bachman thinks the company’s $50 billion FY26 revenue target is reachable though not easy given the macro and foreign exchange headwinds. By comparison, salesforce.com, inc. (NYSE:CRM) had sales of just over $21.2 billion in 2021.
If salesforce.com, inc. (NYSE:CRM) has higher revenue, the company’s earnings per share could potentially increase.
1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 128
Apple Inc. (NASDAQ:AAPL) is a computer giant that designs, manufactures, and markets smartphones, personal computers, tablets, wearables and accessories. The company also sells many software services. Due to the market weakness, Apple Inc. (NASDAQ:AAPL) is down 22% year to date and trades at a forward P/E ratio of 21.4. On 10/11/22, Tim Long of Barclays cut his price target to $155 from $169 and kept an ‘Equal Weight’ rating on Apple Inc. (NASDAQ:AAPL) citing incremental currency headwinds and potential Services weakness.
Distillate Capital commented on Apple Inc. (NASDAQ:AAPL) in its Q2 2022 investor letter,
“Apple was largest new purchase in the quarter, at a 2% weight. Apple underperformed the overall market last quarter,and given very minimal debt, this price weakness translated into a commensurate fall in its enterprise value. For stocks with higher debt levels, it takes a disproportionately bigger market cap drop to achieve the same valuation improvementand this is a key reason we avoid highly leveraged names where significant price weakness can be experienced during a revaluation process. Alongside this decline in EV for Apple, its estimated free cash flows have risen steadily throughout the year. This contrast between a falling enterprise value and rising free cash flow, which is highlighted in Figure 12, made the stock sufficiently better valued such that it entered the portfolio. While Apple’s valuation is now attractive enough to warrant inclusion in the portfolio, it still ranks in the bottom quartile of the portfolio’s holdings and so the stock’s initiating weight is capped at a 2%. This contrasts significantly with Apple’s near-7% position in the S&P 500 benchmark,and reflects both our preference to avoid too much concentration risk as well our goal of ensuring that the overall portfolio valuation is as attractive as possible while balancing characteristics of stability and low indebtedness.”
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