The Dow Jones (^DJI) 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 But even blue-chip stocks can struggle - some are dealing with slowing growth, outdated business models, or increasing competition.
Not all Dow Jones stocks are worth owning - which is why we built StockStory to help you invest wisely. Keeping that in mind, here is one Dow Jones stock positioned for long-term growth and two best left off your watchlist.
Two Stocks to Sell:
Nike (NKE)
Market Cap: $84.19 billion
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Do We Avoid NKE?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Sales are projected to tank by 6.4% over the next 12 months as its demand continues evaporating
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Nike’s stock price of $58.20 implies a valuation ratio of 28.2x forward P/E. Dive into our free research report to see why there are better opportunities than NKE.
Caterpillar (CAT)
Market Cap: $150.9 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 Does CAT Worry Us?
- Organic revenue growth fell short of our benchmarks over the past two years and implies it may need to improve its products, pricing, or go-to-market strategy
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Gross margin of 29% reflects its high production costs
At $323.10 per share, Caterpillar trades at 16.5x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free).
One Stock to Buy:
Microsoft (MSFT)
Market Cap: $3.22 trillion
Short for microcomputer software, Microsoft (NASDAQ: MSFT) is the largest software vendor in the world with its Windows operating system, Office suite, and cloud computing services.
Why Is MSFT a Good Business?
- Microsoft is one of the great brands not just in tech but all of business. It produces mission-critical software and bundles it together, resulting in cream-of-the-crop gross margins.
- The company's elite unit economics lead to robust profit margins that improve over time. This speaks to the scale advantages and operating efficiency across its diverse portfolio, which spans everything from Office and Azure to Minecraft.
- Microsoft has a virtuous cycle of returns. Its dominant market position enables it to generate strong free cash flow, and it reinvests these funds into promising ventures that further strengthen its competitive moat.
Microsoft is trading at $435.96 per share, or 30.5x forward price-to-earnings. Is now the right time to buy? See for yourself in our full research report, it’s free.
Stocks That Overcame Trump’s 2018 Tariffs
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum 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.
