The Dow Jones Industrial Average (DJIA), or the Dow, is a price-weighted index that has long been seen as a barometer of the health of the U.S. economy. After touching all-time highs in late November 2024, the index has corrected nearly 7% in 2025 (as of April 23) and is down 12% from its highs. Rightly so, the correction reflects several unfavourable developments, including economic uncertainties and geopolitical tensions weighing on economic growth. The market is expected to remain volatile as the trade and other aspects of the US administration’s policy agenda play out.
Amid this volatility, based on the potential for share price appreciation in the next 12 months, we have created a selection of the best and worst Dow stocks from the 30 Dow constituent stocks.
Has This Been the Most Volatile Period for The Dow?
If we analyse its trackable history from 1899, the Dow has fallen 7% or more on a single day twenty times. Of those, only seven occurred after the year 2000, and the 5.5% decline on April 5, 2025, doesn’t count as one of those seven, or not even in the historical top twenty. So, technically, this correction was not as severe as earlier. From corrections post 2000, the sharp declines when Covid-19 struck were the most noticeable – Dow fell 7.8%, 10%, and 12% on 9, 12, and 16th March, respectively, and saw further significant declines in that year.
That said, the current period remains one of the most confusing times for market participants, even for the larger players in the equity market, who remain uncertain about their estimates for the broader markets, such as the Dow.
Is Volatility Expected to Continue?
In a recent interview, Lauren Goodwin, Chief Market Strategist at New York Life Investments, emphasized that the fundamental picture remains cloudy and investors are still looking for clarity in macroeconomic fundamentals. Despite some positive economic data recently, policy uncertainty is limiting visibility. As more data is released, she believes markets are entering a sustained period of elevated volatility across equities and fixed income.
What is The Best Way Forward for Investors?
In these testing times, investors should examine fundamentals more critically, preferring Dow stocks with earnings resilience, clear competitive advantages, and exposure to long-term, secular growth themes. On April 28, Stephanie Link, Hightower Advisors’ chief investment strategist, shared her positive outlook on the stock market in an interview on CNBC. With major tech companies, consumer, and financial companies set to announce results, she believes that if corporate earnings remain strong, the recent market rebound could continue. Since early April, the market has recovered significantly, and she attributed the rally to better-than-expected profit margins and steady corporate performance. Although the prominent tech names aren’t cheap in terms of valuation, she views the recent declines as long-term buying opportunities.
While markets may remain volatile in the coming months, the best opportunities in the Dow over the next 12 months should come from stocks with strong pricing power and earnings momentum. Investors should stick to stocks with strong brands, recurring revenue models, and competitive moats, which enable them to navigate macro uncertainty. Since the Dow comprises large-cap companies across various industries, these stocks might perform better during sell-offs.
With these insights, let’s look at the best and worst Dow stocks for the next 12 months.
Our Methodology
To identify the best and worst Dow stocks, we began with the 30 constituent stocks of the DJIA Index. We then ranked these stocks in ascending order based on the consensus 1-year median potential upside. Additionally, we also include data on hedge funds holding stakes in these stocks, utilizing Insider Monkey’s Q4 2024 hedge fund database to provide deeper insights into institutional investor trends.
It is important to note here that the terms “best” and “worst” refer strictly to the relative upside potential and do not imply any fundamental strengths or weaknesses of the underlying companies.
Note: All pricing data is as of market close on April 23.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 363.5% since May 2014, beating its benchmark by 208 percentage points (see more details here).
30. The Coca-Cola Company (NYSE:KO)
Upside Potential: 6.4%
Market Cap: $315 billion
Number of Hedge Fund Holders: 81
The Coca-Cola Company (NYSE:KO) is the first stock on our Best and Worst Dow Stocks list, and consequently, it is also the best-performing stock YTD in the DJIA, as of the close of April 23. It is a global beverage company with a portfolio of over 200 brands, including Coca-Cola, Sprite, Fanta, and Minute Maid. The company has a strong distribution network spanning over 200 countries, with which it generates consistent revenue from its diverse range of carbonated soft drinks, juices, and bottled water. It is consistently ranked among the most valuable brands worldwide.
The Coca-Cola Company (NYSE:KO) continues to benefit from its focus on product innovation and marketing campaigns, which have bolstered its volume growth in its beverage portfolio, robust organic revenue growth, and margin expansion. This has helped the company maintain its market share lead. For FY 2024, organic revenue grew a solid 12% year-over-year, which was driven by 11% growth in price/mix and 2% growth in concentrate sales. Adjusted operating margin for the full year improved by 90 basis points to 30%, and adjusted free cash flow increased by over 10% to $10.8 billion.
Larger beverage companies have recently been discussed heavily regarding the impact of tariffs. The Wall Street Journal recently reported that The Coca-Cola Company (NYSE:KO) may have an edge over its competitor, PepsiCo Inc. (NASDAQ:PEP), as it manufactures most of its soda concentrate in U.S. territories, versus competitors’ manufacturing exposure to Ireland (which is now subject to higher tariffs).
In street activity, UBS analyst Peter Grom recently reiterated his Buy rating on KO and increased the price target on the shares to $84 from $78. Despite a weaker macro environment, the analyst sees the company as better positioned for the upcoming earnings season and has better fundamental visibility, supporting his optimistic view.
29. American Express Company (NYSE:AXP)
Upside Potential: 6.5%
Market Cap: $182 billion
Number of Hedge Fund Holders: 71
American Express Company (NYSE:AXP) is a payments company with operations worldwide. It offers products and services in areas including card networks, merchant acquisition and processing, card issuance, expense management, and travel and lifestyle services. It serves a wide range of customers, including consumers, small and mid-sized companies, and large corporations.
American Express Company (NYSE:AXP) is among the DJIA’s laggards regarding share price performance YTD. Its share has slid over 12% in 2025, a sharp contrast from a substantial 58% increase in 2024.
For Q1 2025, the company reported revenue of $17 billion, which was in line with street expectations and represented a 7% year-over-year growth. That said, EPS of $3.64 exceeded estimates by around 5%. In addition, the company maintained its full-year guidance of 8%-10% revenue growth and EPS range of $15.0 and $15.5. However, the results and the beat on the bottom line were not enough to support substantial upward momentum in the share price.
Following the results, William Blair analyst Christopher Kennedy reiterated his Buy rating on the stock. He believes the shares are trading at a valuation discount despite their better-than-average revenue and earnings growth trajectory. He highlighted American Express Company’s (NYSE:AXP) strategic focus on premium consumers and strong financial positioning, which should help it weather the ongoing economic challenges. As a result, the analyst finds the stock attractive given his expectation of a mid-teens EPS growth driven by cost discipline and multiple growth opportunities.
28. McDonald’s Corp. (NYSE:MCD)
Upside Potential: 6.8%
Market Cap: $228 billion
Number of Hedge Fund Holders: 67
It is difficult to imagine someone not knowing McDonald’s Corp. (NYSE:MCD) and the celebrated golden arches. The company franchises, owns, and operates McDonald’s restaurants across over 100 countries, serving a locally relevant menu of food and beverages. Best known for serving hamburgers, cheeseburgers, and French fries, the company had 43,477 restaurants as of end-2024, with around 95% franchised.
As visible from its share price outperformance year-to-date (+10%), the company’s business remains resilient amid inflationary pressures, helped by its global brand, franchise model, and strong operational efficiency. Over the last few years, the company has benefited from its ‘Accelerating the Arches’ strategy, which focuses on growing market share, expansion of digital platforms, and menu innovations.
Corroborating its investment case, an analyst at Erste Group upgraded the stock’s rating to a Buy from Hold on March 17. The analyst based his upgrade on the company’s high and stable operating margin and business stability. With a 2025 gross profit margin and revenue growth estimate of 57% and 2% year-over-year, he expects MCD’s international segment to grow faster than the domestic business, which should support earnings and share price momentum.
In mid-April, Morgan Stanley analyst Brian Harbour reaffirmed his confidence in the stock with a Buy rating and a price target of $330.
27. JPMorgan Chase & Co. (NYSE:JPM)
Upside Potential: 7.5%
Market Cap: $670 billion
Number of Hedge Fund Holders: 123
JPMorgan Chase & Co. (NYSE:JPM) is a financial services company and the largest U.S. bank by assets ($4.0 trillion as of December 2024). The company is a market leader in investment banking, commercial lending, and asset management.
In a report on April 14, Phillip Securities analyst Glenn Thum reaffirmed his Buy rating on JPMorgan Chase & Co. (NYSE:JPM) with a price target of $252. The analyst highlighted strong growth in the bank’s trading, asset management, and investment banking operations, which drove a 17% year-over-year growth in non-interest income. The key drivers for this growth include healthy activity in equity markets and higher asset management fees supported by net inflows and favourable market conditions.
While the company is witnessing challenges like lower net interest income and increasing expenses, the analyst is encouraged by the overall growth resilience across divisions. He believes that this resilience should help the company sustain earnings momentum. Additionally, dividend increases and share repurchases contribute to the analyst’s optimistic view of the stock.
26. International Business Machines Corp. (NYSE:IBM)
Upside Potential: 9.0%
Market Cap: $228 billion
Number of Hedge Fund Holders: 60
International Business Machines Corp. (NYSE:IBM) is a technology company that provides integrated consulting, software, and infrastructure solutions by leveraging hybrid cloud and artificial intelligence.
Over the last few years, IBM has tried to refocus its strategic growth in areas such as automation, cybersecurity, and quantum computing. The company is particularly encouraged about hybrid cloud, where it sees as much as a $1.7 trillion global opportunity. It is also making robust progress in quantum computing and currently boasts of deploying more quantum systems than the rest of the world combined. In February, the company gave a long-term revenue growth guidance of 5%, including 10% software revenue growth, which supported the share price performance.
Wamsi Mohan, an analyst at Bank of America Securities, recently corroborated these growth prospects. Despite the macroeconomic challenges, Wamsi reiterated his Buy rating on IBM with a price target of $270 in a report published around April 20. He lauded the company’s strong YTD share price performance and attributed it to its recurring revenue streams and the mission-critical nature of its offerings. Among other drivers for his optimism, he counted strong growth in the software business, strategic acquisitions like HashiCorp, a healthy dividend yield, and the benefits from the Mainframe refresh cycle.
25. Johnson & Johnson (NYSE:JNJ)
Upside Potential: 9.2%
Market Cap: $374 billion
Number of Hedge Fund Holders: 98
Johnson & Johnson (NYSE:JNJ) is a healthcare company that develops therapeutics, medical devices, and consumer health products. The company is known for its innovation capabilities and thus focuses on high-growth, scientific research-driven healthcare segments.
Johnson & Johnson (NYSE:JNJ) recently announced that it will spend around $55 billion in the US over the next four years. The pharmaceutical industry is broadly insulated from tariffs so far, but things might change in the coming months. Despite potential tariffs, the company maintained its FY 2025 EPS guidance and modestly increased its revenue guidance, as announced with its Q1 2025 results on April 15.
An analyst from Raymond James noted that Q1 results were strong, with better performance in the pharmaceutical segment, which has driven upward revisions in revenue and EPS estimates. Despite the impact of the loss of exclusivity (LoE) from Stelera, the company should still witness healthier, low single-digit growth. The analyst also believes the new guidance is conservative and achievable, but potential tariffs remain a risk for the pharmaceutical business. He increased the share price target to $164 from $162, keeping his Outperform rating intact.
24. The Goldman Sachs Group Inc. (NYSE:GS)
Upside Potential: 9.6%
Market Cap: $165 billion
Number of Hedge Fund Holders: 81
The Goldman Sachs Group Inc. (NYSE:GS) is a prominent global financial services firm that provides investment banking, securities, and asset management services.
Goldman Sachs Group Inc. (NYSE:GS) reported strong Q1 2025 results. Revenue of $15.1 billion was ahead of the street’s expectation of $14.8 billion. Surprisingly, EPS of $14.1 was substantially ahead of the expectation of $12.3. As a result, the quarter’s return on equity of 16.9% exceeded street estimates.
Buoyed by the stronger results, Bank of America Securities analyst Ebrahim Poonawala reiterated his Buy rating on The Goldman Sachs Group Inc. (NYSE:GS) with a price target of $700, close to the consensus high of $720. He estimates that the stock is undervalued with relatively low price-to-earnings and tangible book value ratios. This provides an attractive entry opportunity for the investors.
Ebrahim also believes that further upside to the share price is underpinned by revenue growth in investment banking, asset, and wealth management businesses, as well as opportunities for better capital allocation after recent stress tests. Share repurchases are also expected to bolster EPS and limit downside risks. These factors reinforce the analysts’ optimism overall.
In another recent report, Jefferies analyst Daniel Fannon maintained his Buy rating on the shares, citing the company’s strong performance amid market volatility.
23. Verizon Communications Inc. (NYSE:VZ)
Upside Potential: 10.1%
Market Cap: $180 billion
Number of Hedge Fund Holders: 74
Verizon Communications Inc. (NYSE:VZ) is a telecommunications company that provides wireless and wireline communications services and products to consumers and businesses.
Verizon Communications Inc. (NYSE:VZ) commands around 37%- 38% of the market share in the US telecom industry, which is generally known for slow growth but strong cash flow generation. Despite this industry dynamic, VZ is trying to support user and average revenue per user (ARPU) growth through innovative offerings, including pricing and service bundles. Wireless service revenue, which constitutes around 56%-60% of its total revenue, grew 3.1% year-over-year in Q4 2024, and is expected to register a 2.0%-2.8% growth in FY 2025 as well.
The company operates on an EBITDA margin of around 34% and generated a robust free cash flow (FCF) of $19.8 billion in FY 2024, up from $18.7 billion in 2023. The momentum will continue in 2025 as the company expects to generate an FCF of $17.5-$18.5 billion, which should eventually help it maintain an already strong over 6% dividend yield. VZ’s financial position is strong, with net debt to EBITDA of 2.3 times, which is considered comfortable relative to the industry.
As per Mordor Intelligence, the US Telecom market size is expected to grow to USD 550 billion by 2030, from USD 459 billion in 2025 (CAGR of 3.67%). In its recently published 2025 global telecommunications outlook, Deloitte highlighted that telecom companies continuously seek innovative ways to diversify their revenue base. Thus, they could capitalize on opportunities like monetizing the GenAI demand, mergers and acquisitions, and profitable strategies to launch 6G. As the leading player, Verizon Communications Inc. (NYSE:VZ) should benefit from these opportunities and ensuing growth.
22. The Procter & Gamble Company (NYSE:PG)
Upside Potential: 11.6%
Market Cap: $389 billion
Number of Hedge Fund Holders: 79
The Procter & Gamble Company (NYSE:PG) is a global consumer goods leader with a vast portfolio of brands, including Tide, Pampers, Gillette, and Head & Shoulders, which are well-known and trusted by millions of households worldwide. It operates in over 180 countries and benefits from strong brand recognition and consumer loyalty.
During the second week of April, JP Morgan analysts reviewed the ratings of their beverage, household & personal care products group companies. For the sector, they highlighted the slowdown in consumption in developed markets, particularly in the US and Western Europe. While the industry is relatively more defensive concerning the effects of tariffs, they believe stocks exposed to China will be adversely affected. In their view, forward guidance and commentary from management will be far more critical than the upcoming quarterly earnings results. Nevertheless, the analyst responsible for The Procter & Gamble Company (NYSE:PG) reiterated his Overweight rating for the company but lowered his price target to $172 from $181.
Around the same time, Morgan Stanley analyst Dara Mohsenian reaffirmed his Buy rating on the shares with a price target of $191. This target is closer to the consensus high of $200 and indicates an upside potential of over 15%.
21. The Travelers Companies Inc. (NYSE:TRV)
Upside Potential: 11.9%
Market Cap: $59 billion
Number of Hedge Fund Holders: 52
The Travelers Companies Inc. (NYSE:TRV) provides commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals. The majority of its revenue comes from the domestic market.
The company reported pretax catastrophe losses of $2.3 billion from the January California wildfires, which hurt its Q1 2025 results announced on April 16. This was higher than the $1.7 billion estimate the company had given in February. Despite this impact, quarterly financial performance was strong, with underlying underwriting income rising 32%, driven by strong net earned premiums of $10.7 billion. Core income of $443 million came in better than expectations.
Street analysts were broadly optimistic after the company’s strong results and long-term outlook, although some analysts highlighted concerns in the near term. William Blair analyst Adam Klauber maintained his Neutral rating on the stock as he sees reduced potential for earnings growth in 2025, but stabilization and better growth in 2026. On the other side, Keefe Bruyette analyst Meyer Shields increased his price target to $290 from $274, and maintained an Outperform rating. Analysts from Evercore ISI and Roth MKM also reiterated their confidence in the stock and maintained their Buy ratings.
20. Amgen Inc. (NASDAQ:AMGN)
Upside Potential: 12.3%
Market Cap: $149 billion
Number of Hedge Fund Holders: 72
Amgen Inc. (NASDAQ:AMGN) is a pioneer in the biotechnology industry. It develops, manufactures, and sells innovative medicines for some of the most serious diseases, including cancer, heart disease, and osteoporosis. Close to ten of Amgen Inc.’s (NASDAQ:AMGN) products delivered at least double-digit sales growth, which helped the company’s 2024 revenue climb 19% YoY to $33.4 billion. It expects to report revenue in the $34.3-35.7 billion range in 2025.
In 2024, the company spent around $6 billion on R&D, up 25% year over year and equating to around 18.5% of total revenue. With that kind of R&D focus, the company has a strong pipeline of potentially best-in-class medicines across many therapeutic areas. The U.S. Food and Drug Administration (FDA) approved UPLIZNA as the first and only treatment for Immunoglobulin G4-related disease (IgG4-RD) in early March. This immune-mediated inflammatory condition can affect multiple organs.
In their latest updates in the last two weeks, analysts from Bernstein, Piper Sandler, and Jefferies have reiterated their Buy rating on the stock.
19. 3M Company (NYSE:MMM)
Upside Potential: 12.5%
Market Cap: $73 billion
Number of Hedge Fund Holders: 79
3M Company (NYSE:MMM) is a diversified global conglomerate that manufactures various products across industrial, safety, transportation, electronics, and consumer markets.
On April 22, the company reported healthy Q1 2025 earnings results. Adjusted revenue for the quarter stood at $5.8 billion, up 1.5% organically, and modestly ahead of street estimates. The EPS of $1.88 was up 10% year-over-year and came substantially ahead of street expectations of $1.77.
For FY 2025, the company reaffirmed its EPS guidance of $7.6 to $7.9 (in line with consensus at mid-point), including a $0.2-$0.4 impact from tariffs. The company is considering several measures to offset the effects of tariffs, including shifting its production bases, pricing actions, and optimizing networks.
Following the results, an analyst at UBS published a report highlighting that the stock remains one of the Top Picks across the UBS coverage universe. Despite the company reiterating its guidance, the analyst increased his EPS estimates for FY 2025. He believes the guidance appears conservative, and there could be further upside to the company’s estimates. Supported by the order trends and better organic growth, the analyst also estimates that the company would win back more market share in the coming years. He, therefore, reiterated a Buy rating with a price target of $184.
18. Honeywell International Inc. (NASDAQ:HON)
Upside Potential: 13.0%
Market Cap: $127 billion
Number of Hedge Fund Holders: 67
Honeywell International Inc. (NASDAQ:HON) is a diversified technology and manufacturing company that serves sectors including aerospace, building technologies, performance materials, and industrial automation.
While the company recently gave a lacklustre outlook for FY 2025, investors are currently focusing on the corporate split announced in early February. By the second half of 2026, the company aims to separate into three listed companies: Honeywell Automation, Honeywell Aerospace, and Advanced Materials. The separation is said to have resulted from the push from activist investor Elliott Management, which revealed a $5 billion stake in the company around mid-November.
According to a CNBC report, Tony Bancroft, a portfolio manager at Gabelli Funds, valued the aerospace and automation businesses at $104 billion and $94 billion, respectively. However, he also advised that the full value might be realized in a longer time frame rather than in the near term.
According to the same report, an analyst from RBC Capital also saw limited potential upside in the near term but indicated substantial value generation in the year after several similar spin-offs.
17. Walmart Inc. (NYSE:WMT)
Upside Potential: 13.8%
Market Cap: $761 billion
Number of Hedge Fund Holders: 116
Walmart Inc. (NYSE:WMT) is the world’s largest retailer by revenue. It operates a global network of hypermarkets, discount stores, and e-commerce platforms. The company focuses on improving customer experience by integrating e-commerce and retail stores with technology.
Walmart operates in the defensive consumer staples space and, rightly so, has had a very stable share price performance so far in the year. The company generated around $675 billion in revenue in FY 2025, and even at that scale, it continues to expect revenue to grow around 3%-4% in FY 2026, which reflects the strength of its business model.
Mizuho analyst David Bellinger recently initiated coverage on Walmart Inc. (NYSE:WMT) with an Outperform rating and assigned a $105 price target. The analyst views the stock as a dominant name in the consumer space and advises it as a must-own name in the current market and economic volatility. He also believes that the company’s shift from a legacy retail model to a tech-oriented one has reached a crucial juncture where its delivery and convenience rival any other player in the industry. The company’s resilient growth and high-margin profile also underpin his favourable opinion.
16. The Boeing Company (NYSE:BA)
Upside Potential: 16.1%
Market Cap: $130 billion
Number of Hedge Fund Holders: 103
The Boeing Company (NYSE:BA) is an aerospace company that manufactures and sells commercial jet aircraft, defense products, and security and space systems to customers in more than 150 countries.
The company had a pretty difficult 2024 as it faced issues regarding quality and safety in its aircraft, management churn, and employee strikes. Its share price tanked around 32% last year. In 2025, the company tried to shore up its operations, and the most crucial decision it took was to sell portions of its Digital Aviation Solutions business, including its Jeppesen, ForeFlight, AerData, and OzRunways assets, to the investment firm Thoma Bravo. The deal, announced on April 22, is valued at $10.6 billion. It not only gives The Boeing Company (NYSE:BA) financial leeway but is also expected to strengthen its focus on core business.
The company also reported its Q1 2025 results on April 23. The main takeaway was the operational improvement underway. Revenue for the quarter grew 18% year-over-year to $19.5 billion, primarily driven by 130 commercial deliveries. Adjusted core operating profit came in at $199 million, a substantial improvement over an operating loss of $388 million in the prior year. Free cash flow burn (i.e., cash usage) also improved to $2.3 billion versus $3.9 billion for the previous year’s quarter.
Analysts have been broadly optimistic about the company’s operational improvements and outlook. Consensus 1-year median price target currently stands at $200, which implies over 16% upside potential.
15. Visa Inc. (NYSE:V)
Upside Potential: 16.7%
Market Cap: $653 billion
Number of Hedge Fund Holders: 181
Visa Inc. (NYSE:V) is a well-known payments network. It provides digital payments and facilitates electronic funds transfers between consumers, merchants, and financial institutions. Notably, the company is not a financial institution and doesn’t issue cards or extend credit. Through its innovative technologies, it earns revenue by facilitating money movement across more than 200 countries and territories among the customers mentioned above.
For the last eight years, Visa Inc. (NYSE:V) has grown its revenues by a CAGR of 11% and EPS by 17%, generating strong free cash flows over those years. As per its latest investor day commentary, the company still sees an enormous opportunity across its businesses, targeting an estimated addressable consumer spend of $41 trillion, a $200 trillion payments volume opportunity in New Flows (Commercial & Money Movement Solutions), and $520 billion in value-added services.
Recent analyst opinions have been broadly positive on the stock. In early April, a Goldman Sachs analyst increased his price target on Visa to $392 from $384 earlier, reaffirming a Buy rating. An analyst from Evercore ISI called companies like Visa and MasterCard Inc. (NYSE:MA) the best defensive plays in a down market.
14. The Sherwin-Williams Company (NYSE:SHW)
Upside Potential: 19.3%
Market Cap: $83 billion
Number of Hedge Fund Holders: 74
The Sherwin-Williams Company (NYSE:SHW) is a specialty chemicals company. It manufactures and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. The company generates 80% of its revenue from the domestic market and the rest from its foreign subsidiaries.
Morgan Stanley analyst Vincent Andrews maintained a Buy rating on The Sherwin-Williams Company (NYSE:SHW) on April 22, setting a price target of $385. He highlighted the company’s ability to deliver strong earnings in a weaker housing market, as he believes its solid pricing power enables it to withstand raw material cost changes and economic shifts. Sherwin-Williams is well-positioned for meaningful market share growth. Compared to his conservative view earlier, the analyst believes the company’s outlook is favourable as its guidance now seems achievable. Additionally, with falling interest rates and improving housing market conditions, Sherwin-Williams is expected to benefit further, potentially boosting its earnings multiple as it captures a greater market share.
13. Apple Inc. (NASDAQ:AAPL)
Upside Potential: 19.8%
Market Cap: $3.07 trillion
Number of Hedge Fund Holders: 166
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets innovative consumer products, including the iPhone, iPad, Mac computers, Apple Watch, and Apple TV. The company also offers a range of software and services, such as the iOS and macOS operating systems, iCloud, advertising, payment services, Apple Music, and the App Store.
Apple Inc. (NASDAQ:AAPL) stock has fallen around 18% this year (as of the close of April 23) due to headwinds from tariffs and the overall escalation of trade issues with China. Additionally, the company faced pressure following reports of delays in introducing key features to its Siri virtual assistant. A weaker-than-competition version of AI in its smartphone would typically hint at lower-than-expected sales, raising investor concerns.
While tariff issues have temporarily subsided after the 90-day pause and ongoing renegotiations with China, investors remain uncertain. Recently, research firm MoffettNathanson flagged risks of a sharp correction in Apple stock due to geopolitical issues, costs hit by tariffs, and growing recession risks.
However, an analyst from Goldman Sachs reiterated his confidence in the stock in a report published around April 23. The analyst believes the company should report better Q2 2025 results (FY ends in September), driven by new products and refresh cycles. He also noted that concerns about price hikes due to tariffs might also lead customers to buy earlier than usual. Additionally, increased competition among U.S. carriers and steady growth in Apple’s Services, like iCloud and App Store, will contribute to better earnings. He therefore reaffirmed his Buy rating with a price target of $256 (down from $259 earlier).
12. Caterpillar Inc. (NYSE:CAT)
Upside Potential: 20.0%
Market Cap: $141 billion
Number of Hedge Fund Holders: 62
Caterpillar Inc. (NYSE:CAT) manufactures construction and mining equipment, diesel and natural gas engines, industrial turbines, and diesel-electric locomotives.
The outlook for Caterpillar Inc. (NYSE:CAT) has been mixed recently, and the stock has thus been seeing lower levels since the start of the year. Although precise exposure to China is not clear, the company derives 18% to 19% of its revenue from the Asia Pacific region, and thus, it has substantial exposure to China. Higher tariffs would result in steeper import costs for Chinese companies and, therefore, could lead to deal cancellations or project postponements.
Despite the macroeconomic pressures, consensus still sees a 20% upside potential with a 1-year median price target of $355. An analyst at BofA Securities recently lowered his share price target to $335 from $414 but maintained his Buy rating. He holds a cautious view on the Machinery, E&C, and Waste sector and expects a challenging earnings season for companies in the industry.
Similarly, JP Morgan analyst Tami Zakaria reiterated his Overweight rating on the shares but reduced the price target to $380 from $490 earlier. The analyst believes that a higher recession probability may weigh on the industry outlook and the near-term guidance of construction equipment group companies. On a slightly worrying note, the analyst also said that the earlier expected second-half acceleration might not materialize.
11. The Home Depot Inc. (NYSE:HD)
Upside Potential: 23.5%
Market Cap: $354 billion
Number of Hedge Fund Holders: 88
The Home Depot Inc. (NYSE:HD) is the world’s largest home improvement retailer with around 2,300 stores across North America. It offers a wide selection of building materials, appliances, tools, and home improvement products.
Home Depot Inc. (NYSE:HD) released its Q4 2024 results on February 22, reporting 14.1% year-over-year growth in quarterly revenue of $39.7 billion. However, comparable basis sales rose 0.8%, exceeding street expectations. Notably, this was the first positive growth reported after eight quarters of decline. For the full year, comparable sales declined 1.8%, and adjusted EPS stood at $15.24, flat year-over-year.
However, the company’s guidance for FY 2025 was softer-than-expected. It guided for total sales growth of 2.8% and comparable sales growth of around 1%, which was lower than the consensus of around 1.65%. Kate McShane, analyst at Goldman Sachs, called the guidance conservative considering the muted housing environment amid persistently higher mortgage rates.
While the housing market softness persists, the company is well-positioned to benefit from a rebound in housing activity and big-ticket projects. On March 11, Morgan Stanley analyst Simeon Gutman reiterated his Buy rating on the stock with a price target of $450. The analyst believes that the company’s expansion of its Pro customer segment through new capabilities and systems should strongly support revenue growth. As per him, the enhanced supply chain and faster delivery times should improve customer engagement and position the company well for the next housing market cycle.
10. Cisco Systems Inc. (NASDAQ:CSCO)
Upside Potential: 25.8%
Market Cap: $221 billion
Number of Hedge Fund Holders: 84
Cisco Systems Inc. (NASDAQ:CSCO) designs, manufactures, and sells networking hardware, software, telecommunications equipment, and other high-technology services and products. The company’s offerings include routers, switches, cybersecurity solutions, and collaboration tools, serving various industries and customers globally.
On March 12, Bank of America Securities analyst Tal Liani reiterated a Buy rating for Cisco Systems Inc. (NASDAQ:CSCO) with a price target of $76. He highlighted positive insights from the company’s CFO and Chief Strategy Officer, which implied growth opportunities in Campus switching and AI infrastructure. According to him, the company’s strong product portfolio positions it well to capitalize on the demand for AI infrastructure build-out. He also noted that the company has already received substantial AI-related orders, which could help it generate higher revenue. Incrementally, Cisco’s recent partnership with Nvidia boosts its opportunities in the expanding AI market.
9. Chevron Corp. (NYSE:CVX)
Upside Potential: 25.8%
Market Cap: $239 billion
Number of Hedge Fund Holders: 81
Chevron Corp. (NYSE:CVX) is an integrated energy company involved in upstream oil and gas exploration, midstream transport, and downstream refining and marketing.
Chevron Corp. (NYSE:CVX) reported a mixed set of Q4 2024 earnings results with revenue of $52.2 billion exceeding expectations, but EPS of $2.06 modestly below estimates. Per guidance in the latest investor communications, the production outlook for 2025 and 2026 remains healthy. The company has guided for 6% annual production growth through 2026, which implies 6%-8% growth in 2025 and 3%-6% in 2026.
It also guided for a significant increase in free cash flow (FCF), estimating $10 billion in additional FCF by 2026. The company also guided for capex of between $15 billion for 2025 and $14-$16 billion in 2026. Management expects capex intensity to moderate in the coming years, supporting higher FCF. Share repurchases will also continue to help the share price, as the company expects to maintain annual buybacks of $10-$20 billion.
On April 21, the company announced the start of oil and natural gas production from the Ballymore project in the Gulf of America, accelerating its production targets for 2026.
8. Microsoft Corp. (NASDAQ:MSFT)
Upside Potential: 28.2%
Market Cap: $2.78 trillion
Number of Hedge Fund Holders: 317
Microsoft Corp. (NASDAQ:MSFT) develops and markets software, hardware, and cloud services. Its flagship products include the Windows operating system, the Microsoft Office suite, and the Azure cloud platform. Additionally, Microsoft owns LinkedIn, GitHub, and Xbox, extending its influence across various industries.
The Magnificent Seven stocks, the top 7 mega-cap companies, have been under severe scrutiny amid market volatility, tariff and recessionary pressures, and sanity checks on the eye-popping share price rally based on their AI dominance. All of them have corrected significantly YTD, but Microsoft Corp. (NASDAQ:MSFT) has relatively been doing better with its share price down around 8%.
Most investors worry about Microsoft’s slow growth in its cloud business, specifically Azure. In its Q2 2025 results, Azure grew 31% year-over-year, and the company also guided for 31%-32% growth in Q3. However, these numbers came in below expectations, leading to concerns about long-term growth. The company has also lowered its capex on cloud infrastructure, leading investors to believe that a growth reset is around the corner.
Despite these concerns, Microsoft is still delivering solid growth, which is commendable for a company of its size. It remains a consensus Buy with a 1-year median price target of $475, implying a 28% potential upside.
Piper Sandler analyst Brent Bracelin recently revised his earnings estimates lower for the cloud applications and analytics sector, driven by ongoing macro issues. He also believes that investor confidence in application software names has come down and is hurt because of the slowdown in growth. While he lowered his price target for Microsoft to $435 from $520, he maintained his Overweight rating as he believed that valuation multiples appeared attractive, at their lowest in seven years, despite the relatively lower impact of tariffs on the software industry.
The stock was also the best stock among our list of 10 Best Software Stocks to Buy According to Billionaires.
7. NIKE Inc. (NYSE:NKE)
Upside Potential: 28.9%
Market Cap: $85 billion
Number of Hedge Fund Holders: 73
NIKE Inc. (NYSE:NKE) is the world’s most extensive athletic footwear and apparel seller. Apart from athletic footwear and clothing, it sells equipment, accessories, and services worldwide through its owned retail stores and digital platforms, distributors, and licensees.
NIKE Inc. (NYSE:NKE) has underperformed this year, with its share price down around 24% YTD. However, in a note published around April 25, Bank of America Securities analyst Lorraine Hutchinson highlights this underperformance as an opportunity because she believes that the stock now fairly factors in all the challenges, such as tariffs and weakening demand in China. Moreover, despite the decline in China sales, she notes that the recent decline in share prices appears to be overdone.
The analyst also believes that the company’s strong supply chain would ensure it can offset the tariff pressures by selectively increasing prices across global markets. Lorraine also noted that the company is burning its existing inventory, which should help it focus on further product innovation and increase sales growth. As a result, the analyst reiterated a Buy rating on NIKE Inc. (NYSE:NKE), although with a decreased price target of $80, down from $90 earlier.
On April 23, DBS analyst Alison Fok upgraded the stock to a Buy with a price target of $115, substantially above the consensus of $74.
6. UnitedHealth Group Inc. (NYSE:UNH)
Upside Potential: 31.2%
Market Cap: $391 billion
Number of Hedge Fund Holders: 150
UnitedHealth Group Inc. (NYSE:UNH) is one of the largest health care companies in the world. It provides health insurance and healthcare solutions in the U.S. and globally under the UnitedHealthcare and Optum brands.
The company’s Q1 2025 results were modestly weaker, but the outlook was disappointing, which led to substantial turmoil in its share prices (-22% on April 17). Q1 revenue of $109.6 billion came in 2% below expectations, and EPS of $7.2 was around 1.5% below. However, the main negative surprise was the outlook, where the company slashed the adjusted EPS guidance by around 12% to $26.0-26.5, from its earlier guidance of $29.5-$30.0. Investors were quite disappointed by the rare guidance cut as the company has historically guided very conservatively.
Despite the weaker guidance, Whit Mayo, an analyst from Leerink Partners, corroborated his confidence in the company by maintaining a Buy rating with a price target of $520 in a report published around April 23. As the company’s management is working to adjust its plans according to the rising medical costs, the analyst believes that the company’s long-term prospects are intact and sees a solid potential for recovery in 2026. He also believes that earnings will be supported by Medicare Advantage margin improvement next year. In addition, the analyst saw the current valuation as attractive and thus maintained his Buy rating.
5. Merck & Co. Inc. (NYSE:MRK)
Upside Potential: 34.7%
Market Cap: $198 billion
Number of Hedge Fund Holders: 91
Merck & Co. Inc. (NYSE:MRK) is a global pharmaceutical company known for its innovations in vaccines, oncology, infectious diseases, and animal health products. The company’s blockbuster drugs, including Keytruda and Gardasil, contribute significantly to its revenue growth.
In its Q1 2025 earnings results on April 24, the company reported quarterly revenue of $15.5 billion and adjusted EPS of 2.22, which came in 2%-4% ahead of street expectations. Revenue for its GARDASIL product decreased 41% due to lower demand from China, which led to total revenue falling 2% year over year. The company maintained its 2025 revenue guidance of $64.1-$65.6 billion and guided the adjusted EPS to be between $8.82 and $8.97.
While there are near-term challenges, analysts see it as a fundamentally stronger company, and the consensus opinion on the stock remains broadly positive with substantial upside potential. As evidence, Leerink Partners analyst Daina Graybosch reiterated a Buy rating on the stock on April 25. The analyst was encouraged by the company’s efforts to localize its manufacturing and focus on inventory buildup to offset pressures from potential tariffs. Merck & Co. Inc.’s (NYSE:MRK) strong pipeline and success in recent trials should keep investors positive, despite concerns over the Keytruda 2028 loss-of-exclusivity. Therefore, the analyst maintained his optimistic view.
4. Amazon.com Inc. (NASDAQ:AMZN)
Upside Potential: 38.4%
Market Cap: $1.92 trillion
Number of Hedge Fund Holders: 339
Amazon.com Inc. (NASDAQ:AMZN) is involved in retail e-commerce, content subscription services (Prime Video), advertising, and cloud computing. The company’s product offerings through its online and offline stores include merchandise and media content acquired for resale and products from third-party sellers. Additionally, Amazon.com Inc. (NASDAQ:AMZN) operates one of the largest data center networks globally through its Amazon Web Services (AWS) division. AWS provides a comprehensive suite of cloud services, including computing power, storage options, and networking capabilities, catering to a diverse range of customers from startups to large enterprises.
Despite the correction in the Magnificent Seven stocks, Amazon remains a consensus Buy. Analysts still expect the stock to reach $250 in one year, implying over 38% upside potential. In their “Alger Spectra Fund” Q1 2025 investor letter, portfolio managers at investment management company Fred Alger Management highlighted the underperformance of Amazon in Q1 because of tariff concerns and subsequent increase in operational costs and impact on consumer spending. They also highlighted softer Q1 sales guidance and high cloud and AI capex impact on profitability as the reason for the underperformance.
Despite this, the portfolio managers maintained their confidence in Amazon.com Inc. (NASDAQ:AMZN), driven by its strong fundamentals. The company continues to derive strength from its diversified business model and product and service innovation. They also highlighted the company’s dominant position in high-growth areas like e-commerce and cloud computing as the reason for their optimistic view.
On April 25, William Blair analyst Dylan Carden reaffirmed his Buy rating on the company as he believes Amazon.com Inc. (NASDAQ:AMZN) is better positioned to handle the ongoing challenges.
3. The Walt Disney Company (NYSE:DIS)
Upside Potential: 42.6%
Market Cap: $158 billion
Number of Hedge Fund Holders: 108
The Walt Disney Company (NYSE:DIS) is a diversified global entertainment company that operates media networks, streaming platforms, parks and experiences, and entertainment studios. The company owns several well-known brands, such as ESPN, Marvel, Pixar, Lucasfilm, and Disney+.
In early April, ClearBridge Investments revealed a new position in Disney, per its “ClearBridge Value Strategy” Q1 2025 investor letter. The fund believes the company is progressing well with its streaming service, which could lead to better-than-expected profit margins and earnings. They also highlighted the company’s shift in strategy. As per this change, instead of focusing on aggressive market share gains, the company is now working on improving prices, which should boost profitability.
In another vote of confidence for the stock, an analyst at Wolfe Research upgraded Disney to Outperform with a price target of $112 (~23% upside). The analyst highlighted the strength of Disney’s business model amid increasing risks of recession, and that the stock is already factoring in a downturn. He believes the company has a strong positioning in parks, cruises, and streaming businesses, which could support EPS to rise to $7. He also sees the current valuation as compelling because the company trades at a significant discount to the S&P 500.
2. Salesforce Inc. (NYSE:CRM)
Upside Potential: 51.7%
Market Cap: $241 billion
Number of Hedge Fund Holders: 162
Salesforce Inc. (NYSE:CRM) is a global leader in customer relationship management (CRM) software. Its cloud-based platform provides sales, service, marketing, and commerce solutions, enabling businesses to build stronger customer connections using data and AI. Salesforce’s AI-driven tools, including Einstein, offer predictive insights and automation to boost productivity.
Salesforce Inc. (NYSE:CRM) is the worst performer in the Dow Jones Index on a YTD basis (-25% as of the close of April 23). Besides the volatility in the technology sector, the underperformance was mainly linked to a softer outlook for next year. For FY 2026, the company guided revenue to be $40.5-$40.9 billion compared to the consensus estimate of $41.5 billion. This was seen as an indication of a slowdown and thus weighed on the share price performance.
Due to the weaker macro environment, technology stocks, particularly cloud computing stocks, have seen downward revisions in their earnings estimates. For example, Piper Sandler analyst had lowered his estimates and price targets across the cloud applications and analytics sector in a report published around April 23. As part of this exercise, he reduced the price target for Salesforce Inc. (NYSE:CRM) to $315 from $400 but maintained his Overweight rating. At the end of March, analysts from Jefferies had also reduced the price targets across their software coverage to account for compressed valuation multiples. With a Buy rating, he lowered Salesforce’s price target to $375 from $425.
The consensus opinion remains bullish on the stock with a 1-year median price target of $375. The company is currently focusing on scaling and expanding its Agentforce tools, which are expected to take time to grow. The company has already reported closing thousands of Agentforce deals and expects a significant revenue contribution next year.
1. NVIDIA Corp. (NASDAQ:NVDA)
Upside Potential: 56.8%
Market Cap: $2.51 trillion
Number of Hedge Fund Holders: 223
NVIDIA Corp. (NASDAQ:NVDA) is a leading innovator in the design and production of graphics processing units (GPUs), system-on-a-chip (SoC) solutions, and AI-driven hardware and software. The company’s GPUs are essential to high-performance computing, AI training, and inference and serve as the backbone of data center infrastructure worldwide.
After the emergence of China’s DeepSeek, concerns over the efficiency of the huge AI investments, along with market volatility and macroeconomic uncertainty, have kept some investors cautious. However, there is a strong belief that NVIDIA Corp. (NASDAQ:NVDA)‘s long-term investment case remains robust. Its cutting-edge technology drives advancements in artificial intelligence, deep learning, and data analytics, reinforcing the company’s pivotal role in shaping next-generation computing.
In their “Alger Spectra Fund” Q1 2025 investor letter, portfolio managers at investment management company Fred Alger Management highlighted the company’s strong prospects based on rising demand for NVIDIA products due to the increasing need for computing power. They stated:
“We believe Nvidia’s leadership in scaling AI infrastructure, including advancements in inference and reasoning during inference, continues to drive adoption among enterprises and startups, ensuring sustained demand for its high-performance chips and software solutions. As older-generation chips are repurposed and new clusters deployed, we see Nvidia as well-positioned to capitalize on rising computational needs across AI applications.”
On April 25, Morgan Stanley analyst Joseph Moore remained highly optimistic on NVIDIA, driven by demand for inference chips. His analysis suggests that this demand is further fuelled by the shortage of inference chips across regions and faster growth in token generation. Such growth bodes well for the company as organizations must invest more into the infrastructure required for such workloads. Despite near-term supply chain and macro issues, the analyst believes the company’s strong positioning in the AI cycle and production capabilities support his optimistic view. He maintained a Buy rating with a price target of $160.
Overall, NVDA ranks first on our list of the best and worst Dow stocks for the next 12 months. While we acknowledge the potential of Dow stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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