The Dow Jones (^DJI) is home to corporate giants, but size alone doesn’t guarantee success. A few of these companies are struggling with weak fundamentals, paradigm shifts, or poor execution.
Finding the best companies in the Dow Jones isn’t always straightforward, and that’s why we started StockStory. That said, here are two Dow Jones stocks positioned for long-term growth and one that may struggle.
One Stock to Sell:
Home Depot (HD)
Market Cap: $311.8 billion
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Why Are We Cautious About HD?
- Annual sales growth of 2.3% over the last three years lagged behind its consumer retail peers as its large revenue base made it difficult to generate incremental demand
- Disappointing same-store sales over the past two years show customers aren’t responding well to its product selection and store experience
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 33.2%
Home Depot is trading at $312.94 per share, or 20.5x forward P/E. Read our free research report to see why you should think twice about including HD in your portfolio.
Two Stocks to Watch:
Caterpillar (CAT)
Market Cap: $405.3 billion
With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.
Why Should CAT Be on Your Watchlist?
- Disciplined cost controls and effective management resulted in a strong long-term operating margin of 16.9%, and its profits increased over the last five years as it scaled
- Free cash flow margin expanded by 5 percentage points over the last five years, providing additional flexibility for investments and share buybacks/dividends
- Industry-leading 36.6% return on capital demonstrates management’s skill in finding high-return investments
Caterpillar’s stock price of $879.50 implies a valuation ratio of 34.9x forward P/E. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free.
Travelers (TRV)
Market Cap: $65.17 billion
Tracing its roots back to 1853 when it insured travelers against accidents on steamboats and railroads, Travelers (NYSE: TRV) provides a wide range of commercial and personal property and casualty insurance products to businesses, government units, associations, and individuals.
Why Are We Positive On TRV?
- Pre-tax profit margin expanded by 10.5 percentage points over the last two years as it scaled and became more efficient
- Performance over the past two years was turbocharged by share buybacks, which enabled its earnings per share to grow faster than its revenue
- Projected book value per share growth of 22% for the next 12 months is above its two-year trend, pointing to accelerating profitability
At $306.46 per share, Travelers trades at 1.9x forward P/B. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meeting near-term momentum - both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks - FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.
