The Dow Jones 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 But even blue-chip stocks can struggle - some are dealing with slowing growth, outdated business models, or increasing competition.
Finding the best companies in the Dow Jones isn’t always straightforward, and that’s why we started StockStory. That said, here is one Dow Jones stock that could be a good addition to your portfolio and two that may struggle.
Two Stocks to Sell:
Coca-Cola (KO)
Market Cap: $302.8 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 Do We Think Twice About KO?
- Annual sales growth of 6.7% over the last three years lagged behind its consumer staples peers as its large revenue base made it difficult to generate incremental demand
- Efficiency has decreased over the last year as its operating margin fell by 3.4 percentage points
- Free cash flow margin dropped by 11.2 percentage points over the last year, implying the company became more capital intensive as competition picked up
Coca-Cola’s stock price of $70.79 implies a valuation ratio of 24.1x forward price-to-earnings. Dive into our free research report to see why there are better opportunities than KO.
Verizon (VZ)
Market Cap: $189.1 billion
Formed in 1984 as Bell Atlantic after the breakup of Bell System into seven companies, Verizon (NYSE:VZ) is a telecom giant providing a range of communications and internet services.
Why Do We Think VZ Will Underperform?
- Customer additions have disappointed over the past two years, indicating the company’s value proposition may not be resonating
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 1.6%
- Shrinking returns on capital from an already weak position reveal that neither previous nor ongoing investments are yielding the desired results
At $45.31 per share, Verizon trades at 9.5x forward price-to-earnings. If you’re considering VZ for your portfolio, see our FREE research report to learn more.
One Stock to Watch:
Apple (AAPL)
Market Cap: $3.27 trillion
Creator of the iPhone and shepherd of the App Store, Apple (NASDAQ:AAPL) is a legendary developer of consumer electronics and software.
Why Should AAPL Be on Your Watchlist?
- 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 is trading at $217.16 per share, or 28.7x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
Stocks We Like Even More
With rates dropping, inflation stabilizing, and the elections in the rearview mirror, all signs point to the start of a new bull run - and we’re laser-focused on finding the best stocks for this upcoming cycle.
Put yourself in the driver’s seat by checking out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.