The Dow Jones Industrial Average, also referred to as the Dow, is a stock market index, first established in 1896, that measures the stock performance of 30 large companies listed on American stock exchanges.
Since hitting lows in March due to the coronavirus induced market crash, the Dow Jones Industrial Average has rallied about 45%. However, it might surprise you to know that currently, 21 out of the 30 companies on the Dow, are negative year-to-date…
The worst performer is Boeing Co. (BA), which is down almost 50% on the year.
However, there are some winning stocks in the Dow that have helped the index rally so much in the past 4 months. Some of these winning stocks also currently have Buy Ratings in the StockNews POWR Ratings service: AAPL, MSFT, JNJ, and HD.
Let’s take a closer look at these four outperforming stocks on the Dow:
Apple Inc. (AAPL)
In the fiscal third quarter ended June 27th 2020, AAPL’s revenue increased 11% and earnings per share increased 18% year-over-year. Moreover, international sales accounted for 60% of the quarter’s revenue which indicates the global appeal APPL’s products possess.
AAPL’s CEO Tim Cook said, “Apple’s record June quarter was driven by double-digit growth in both Products and Services and growth in each of our geographic segments. In uncertain times, this performance is a testament to the important role our products play in our customers’ lives and to Apple’s relentless innovation.”
There has been immense hype for the first 5G iPhone which could face a delay in launch due to the current circumstances. However, most experts are projecting that over 100 million iPhone 12s will be sold within a couple of months of the phone’s release.
AAPL’s strong customer loyalty and the diversification of its product line gives it a competitive advantage and the company’s wide array of products and services other than the iPhone could also do well. AAPL announced the transition of the Mac computers to its custom silicon which would help developers optimize software for the Apple ecosystem and also introduced the next release of macOS, macOS Big Sur.
Since its March lows, the stock is up by about 90%. AAPL has an impressive earnings surprise history with the company beating consensus EPS estimate in each of the trailing four quarters. AAPL’s EPS is expected to grow 12.5% per annum in the next five years.
How does AAPL stack up for the POWR Ratings?
- A for Trade Grade
- A for Buy & Hold Grade
- A for Peer Grade
- A for Industry Rank
- A for Overall POWR Rating
The stock is also ranked #1 out of 28 stocks in the Technology-Hardware industry.
Microsoft Corporation (MSFT)
MSFT’s stock has gained more than 55% since its March lows. In the fiscal fourth quarter ended June 30 2020, revenue increased 13% and operating income increased 8% year over year.
Recently the company has a number of exciting business partnerships and a possible acquisition.
Last week MSFT announced a collaboration with Mastercard (MA), to accelerate the Mastercard Labs’ cloud native research, build pathways for financial security and drive innovation in digital commerce which could be beneficial for MSFT.
MSFT has also expanded its relationship with the leading global provider of consumer-packaged goods by announcing a five-year partnership with PepsiCo (PEP) in which it will bolster the company’s operational agility and product innovation.
MSFT is proceeding with discussions to acquire TikTok with the intention of adding security, privacy and digital protections to the app and appreciates the significance of addressing President Trump’s concerns.
MSFT’s consensus revenue estimate of $35.69 billion for the quarter ended September 2020 indicates an 8% increase year-over-year. Also, the market expects the company to report earnings of $1.54 per share, which indicates an 11.6% improvement over the year-ago number. Moreover, MSFT has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters.
It’s no surprise that MSFT is rated “Strong Buy” in our POWR Ratings system. It also has an “A” for Trade Grade, Buy & Hold Grade and Industry Rank, and a “B” for Peer Grade. In the 82-stock Software-Applications industry, it is ranked #1.
Johnson & Johnson (JNJ)
JNJ has recently announced that it has received FDA approval for SPRAVATO® which is an antidepressant medication and also for Breakthrough Device Designation for transbronchial microwave ablation technology using robotic-assisted bronchoscopy.
The company announced that its lead vaccine candidate evoked an immune response demonstrated by neutralizing antibodies preventing infection in the pre-clinical study. JNJ is currently conducting its randomised placebo controlled initial first in-human Phase 1/2a trials in the United States and Belgium.
The company is already planning its phase 3 clinical trial ahead of schedule with the National Institute of Allergy and Infectious Diseases (NIAID) contingent on regulatory approval of its previous trials.
The collaboration between Janssen Pharmaceutical Companies of JNJ and Biomedical Advanced Research and Development Authority (BARDA) will help accelerate the process of vaccine development. Furthermore, the company’s deal with Catalent Pharma Solutions (CTLT) will help ramp up its vaccine production infrastructure.
JNJ has an impressive earnings surprise history with the company beating consensus EPS estimates in each of the trailing four quarters. JNJ’s EPS is expected to grow 5.08% per annum in the next five years. The stock has grown more than 20% since its March lows.
JNJ has a “Strong Buy” rating in the POWR Ratings system and has a grade of “A” in all the POWR components. JNJ is ranked #1 out of 215 stocks in the Medical-Pharmaceuticals industry.
Home Depot, Inc. (HD)
HD is the largest home improvement retailer in the United States with a market cap of $288 billion and the stock has returned more than 90% since its March lows.
HD announced that it is accelerating investments for refreshing its outdoor power category in order to simplify its primary brands across the category. The company plans to open three new distribution centers in Georgia over the next one and a half years to facilitate flexible delivery and pick up options for customers.
With the integration of e-commerce, HD has an infrastructural base which involves the option of store pick-up as well as delivery service. HD’s sales in the first quarter this year were $23.8 billion, which represents a 7.1% increase from the previous year.
The company has an annual dividend of $6, which yields 2.2%. The earnings surprise history for HD looks pretty good, as the company beat the street EPS estimates in three of the trailing four quarters.
HD’s consensus revenue estimate of $33.31 billion for the current quarter indicates a year-over-year increase of 8%. The market expects the company to report earnings per share of $3.42 for the current quarter, which represents a 7.9% improvement over the year-ago RPS.
HD’s POWR Ratings reflect this promising outlook. It has an overall rating of “Strong Buy” with an “A” for Trade Grade, Buy & Hold Grade, and Peer Grade and a “B” for Industry Rank. Among the 66 stocks in the Home Improvement & Goods group, it’s ranked #1.