Five Dow Jones Stocks That Can Outperform The Market This Year

#2 Apple Inc. (NASDAQ:AAPL)

– Investors with Long Positions (as of December 31): 133

– Aggregate Value of Investors’ Holdings (as of December 31): $17.72 billion

Moving on, the number of investors tracked by us with long positions in Apple Inc. (NASDAQ:AAPL)’s stock remained the same during the fourth quarter and the aggregate value of their holdings in it also remained nearly unchanged. Though Carl Icahn‘s Icahn Capital LP reduced its stake in the company by 14% to 45.76 million shares during that period, it still remained Apple Inc. (NASDAQ:AAPL)’s largest shareholder among the funds we cover at the end of December. Apple’s stock is currently trading flat for 2016 thanks to the 10% rally it has had in the past month. On March 21, the company unveiled a new 4-inch phone, iPhone SE, priced at $399 and a new 9.7 iPad Pro priced at $599. After the launch of these products, some analysts and investors raised concerns that the SE will cannibalize the sales of the company premium iPhones. However, according to JP Morgan’s analyst Rod Hall, those concerns are unfounded. On March 22, Mr. Hall released a note to his clients in which he reiterated his ‘Buy’ rating on the stock and wrote, “Apple just opened up a substantial iPhone market opportunity and nobody seems to have noticed”.

#1 Microsoft Corporation (NASDAQ:MSFT)

– Investors with Long Positions (as of December 31): 140

– Aggregate Value of Investors’ Holdings (as of December 31): $23.42 billion

With its ownership among investors increasing by 27 and the aggregate value of their holdings surging by over $4 billion, Microsoft Corporation (NASDAQ:MSFT) emerged as the most popular Dow stock among the funds tracked by us heading into 2016. Shares of the Silicon Valley giant have inched down by nearly 4% so far this year, but are trading comfortably above $50 mark, which it surpassed for the first time last year. Though the company is currently trading at a rich valuation with a trailing P/E of 38.50, its still sports a respectable annual dividend yield of 2.66%. Most analysts who cover the stock are currently bullish on it largely due to the growth that the company’s cloud platform, Azure, has shown in the past couple of quarters. Some analysts also believe that Microsoft Corporation (NASDAQ:MSFT) is better positioned to capitalize on the cloud opportunity and will have better margins going forward since it only supplies cloud software and not the hardware like some of its peers. The 36 prominent analysts and research houses that cover the stock currently have an average rating of ‘Overweight’ and an average price target of $59.54 on it. James Crichton‘s Hitchwood Capital Management initiated a stake in Microsoft Corporation during the October-December period by purchasing 5 million shares of the company.

Disclosure: None