The Dow Jones Industrial Average, often referred to as the “Dow” is an index fund composed of 30 influential American companies that represent the most traded on the New York Stock Exchange (NYSE ). These companies include famous Dow stocks like Apple (NASDAQ:AAPL), Coca-Cola (NYSE:KO) and Microsoft (NASDAQ:MSFT), among others.
Recently, as investors have started to rotate from mega and large-caps to small-caps in anticipation of the Federal Reserve cutting interest rates, the Dow has taken a bit of a tumble. It is down over 3% in the last five trading days. While this may not seem like a lot, for an index fund that tracks the performance of the 30 most active companies on the NYSE, this is a large drop. However, with time, the market will recover. This means that now is the perfect time for investors to buy the dip on companies in the Dow. Here are three companies that you should consider buying the dip on.
Nike (NKE)
Nike (NYSE:NKE) is a brand that needs no introduction. From the world’s top athletes to teenagers, everyone knows about Nike’s shoes. This hasn’t helped the stock recently though, as the company’s valuation has tumbled over 33% from the start of the year. This is primarily due to lackluster, declining sales. However, I am bullish on the company in the long run.
While Nike did significantly underperform competitors like ON (NYSE:ONON), Adidas (OTCMKTS:ADDYY), and Hoka (NYSE:DECK), it remains a great value stock for many reasons. Revenue and guidance falling have led to a bearish downtrend– management is aware of this and will be taking action in accordance. This includes the promise to build a “multiyear cycle of innovation”.
Additionally, the Paris Olympics, which are coming up soon, are going to be a great catalyst for Nike, which has recognized this, and started an extreme ad campaign centered around it. Analysts have taken this, and many other factors into consideration, and have given it an average one-year price target of $92.45, representing a potential of more than 30%, making this Dow stock a buy.
Visa (V)
Visa (NYSE:V) is a global payments technology company. It facilitates electronic funds transfers throughout the world, primarily through Visa-branded credit cards, debit cards, and prepaid cards. Visa also provides payment processing and information services, connecting consumers, businesses, and financial institutions in over 200 countries and territories.
V stock has been down 7% over the past month, but the stock is poised for a comeback. The stock is currently trading at $254.17 with a market cap of $494.58 billion. The company is incredibly profitable, with a profit and operating margin of 54.72% and 66.86% respectively. The stock has consistently beaten EPS predictions over the past year, with an average surprise of 2.45%.
Almost 94% of the stock is held by institutions, with 166 hedge fund investors, indicating strong confidence from major financial entities and suggesting stability and long-term growth potential. The stock will continue to remain profitable as the company makes money off of pretty much every transaction carried out by a Visa-branded card. Given Visa’s profitability, institutional support, and consistent earnings performance, it’s one of the solid Dow stocks to buy for long-term investors.
Apple (AAPL)
A stalwart consumer tech stock, Apple designs several products including the iPhone, iPad, and Mac, and provides services like iCloud, Apple Music, Apple Pay, and Apple TV+. The company has recently announced ‘Apple Intelligence’, its latest initiative to integrate AI and machine learning across its product ecosystem.
AAPL stock is currently trading at $218.54 as of the market close on 07/24/24 with a market cap of $3.315 trillion, making it the largest company in the world by market cap. The stock has fallen over 6% over the past 10 days, but I expect the trend to reverse anytime. The stock has consistently beaten EPS predictions over the past year, with an average surprise of 4%. The company displays impressive profitability with a profit margin of 26.31% and an operating margin of 30.74%.
The iPhone makes up a huge share of Apple’s revenue, but sales dipped in 2023 compared to 2022 due to heightened competition. However, its revenue could surge with the launch of the iPhone 16 lineup, the only product line compatible with Apple Intelligence features (apart from the 15 Pro and 15 Pro Max models). All these factors put AAPL among the strong Dow stocks to buy as its AI advancements will act as catalysts to boost stock value.
On the date of publication, Achintya Pasricha did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.