The Dow Jones (^DJI) is made up of 30 of the most established and influential companies in the market. But even blue-chip stocks can struggle - some are dealing with slowing growth, outdated business models, or increasing competition.
Not all Dow Jones stocks are worth owning - which is why we built StockStory to help you invest wisely. That said, here are two Dow Jones stocks that could be good additions to your portfolio and one that may struggle.
One Stock to Sell:
Walmart (WMT)
Market Cap: $826 billion
Known for its large-format Supercenters, Walmart (NYSE: WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Why Does WMT Fall Short?
- Sizable revenue base leads to growth challenges as its 5% annual revenue increases over the last six years fell short of other consumer retail companies
- Widely-available products (and therefore stiff competition) result in an inferior gross margin of 24.8% that must be offset through higher volumes
- Performance over the past six years shows its incremental sales were much less profitable, as its earnings per share fell by 6.7% annually
At $103.49 per share, Walmart trades at 37.8x forward P/E. To fully understand why you should be careful with WMT, check out our full research report (it’s free).
Two Stocks to Watch:
Apple (AAPL)
Market Cap: $3.53 trillion
Creator of the iPhone and App Store, Apple (NASDAQ: AAPL) is a legendary developer of consumer electronics and software.
Why Do We Like AAPL?
- Apple's revenue base is so large because nearly everyone in the U.S. has an iPhone, but this is a double-edged sword. Growth must now come from upgrades, a harder pitch that has resulted in sluggish top-line performance recently.
- Still, Apple's devices have endured for decades, speaking to its brand, design ethos, and technological chops. Its success is rare in the world of consumer electronics, which is fraught because of commoditization, competition, and obsolescence risk.
- The company may not have the best gross margin because of its hardware orientation, but it still manages to produce elite operating and free cash flow margins. This shows it doesn’t need over-the-top marketing campaigns to convince people to buy its products.
Apple’s stock price of $238.15 implies a valuation ratio of 31.9x forward price-to-earnings. Is now the time to initiate a position? Find out in our full research report, it’s free.
Coca-Cola (KO)
Market Cap: $286 billion
A pioneer and behemoth in carbonated soft drinks, Coca-Cola (NYSE: KO) is a storied beverage company best known for its flagship soda.
Why Are We Fans of KO?
- Enormous revenue base of $47.23 billion provides significant negotiating leverage in retail partnerships
- Products command premium prices and lead to a best-in-class gross margin of 61.1%
- Highly efficient business model is illustrated by its impressive 25.1% operating margin, and its operating leverage amplified its profits over the last year
Coca-Cola is trading at $66.52 per share, or 21.4x forward P/E. Is now the right time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
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