The Dow Jones Industrial Average has been around since 1885. The index contains 30 stocks and has regularly added and removed holdings from the list. An index with 30 stocks has more concentration than indices like the S&P 500 and the Nasdaq 100, which spread their assets across more holdings. However, some Dow stocks to buy are better than others.
Investors must decipher which ones make the most sense for their portfolios before investing. Making these decisions before a sharp correction or crash is especially useful. Knowing what you want can prepare you better when stocks go on the discount aisle.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is the world’s most valuable publicly traded corporation. Its market cap dwarfs $3 trillion, and investors can get in at a 35 P/E ratio. The stock is slightly down from its all-time high, but a good earnings report suggests plenty of gains for long-term investors.
The tech giant announced 17% year-over-year revenue growth and 20% year-over-year net income growth in Q3 FY24. These results are similar to what investors saw in the previous quarter. Once again, Microsoft Cloud revenue was the highlight. This segment grew by 23% year-over-year to reach $35.1 billion in total revenue. Microsoft brought in $61.9 billion across its business segments.
The corporation is well-diversified in various verticals, and Microsoft is growing in many. Social media, cloud computing, artificial intelligence, gaming and advertising are all opportunities under the corporate umbrella. Microsoft stock has been a steady performer and has tripled over the past five years.
Visa (V)
Visa (NYSE:V) offers a haven during economic uncertainty since people still need to spend money on goods and services. While certain products can become less desirable, credit and debit cards aren’t going away.
This dynamic has turned Visa into a bellwether stock that investors use to gauge the economy’s strength. Visa’s latest earnings report offered good news for investors. Revenue increased by 10% year-over-year, while GAAP earnings per share jumped by 12% year-over-year. Rising cross-border volume contributed to the fintech firm’s growth.
The corporation also returned $3.8 billion to shareholders through stock buybacks and dividends. Visa has a low yield of 0.76% but has an impressive dividend growth rate. The company’s annualized dividend growth rate stands at 18.05% over the past decade. Investors can generate high cash flow from this company if they wait long enough. Patients can get higher yields if they wait for Visa stock to enter a correction.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) offers investors exposure to multiple high-growth verticals. It has a leading position in e-commerce and cloud computing. However, the company’s expansion into advertising, streaming, artificial intelligence and groceries can generate additional gains.
Amazon reported solid results in Q4 2023. During that quarter, net sales increased by 14% year-over-year to $170.0 billion. Amazon Web Services was a notable growth engine that delivered 13% year-over-year revenue growth for the firm. Amazon’s advertising services delivered 27% year-over-year growth to $14.7 billion.
The tech conglomerate has delivered a 20% year-to-date return for its investors. Shares are also up by 64% over the past year.
Analysts are feeling optimistic about Amazon stock. They have rated the stock as a “Strong Buy, ” giving it a projected 19% upside. The stock has 42 “Buy” ratings and no “Hold” or “Sell” ratings. The highest price target of $235 per share implies a 31% upside from current levels.
On this date of publication, Marc Guberti held long positions in MSFT and AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.