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Top 5 Dow Stocks That Helped the Index Gain in 2020
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The global economy has been reeling under the daily spike in coronavirus cases, suffering massive losses. Despite central banks imposing emergency interest rate cuts to support employment and market growth, negative investor sentiments took center stage for most part of the year. As a consequence, Wall Street witnessed its fastest bear market crash in history during March 2020, per a Business Insider article.
On the flip side, we see a silver lining regardless of the stories of gloom and doom floating around, as we draw the curtains on a grim year. Notably, three major stimulants to global markets in 2020 significantly drove the Dow stocks, which are victory of the U.S. president-elect Joe Biden, joint rollout of the first COVID-19 vaccine shots by Pfizer and BioNTech and a stimulus package offered for COVID-19 relief. On a year-to-date basis, the Dow Jones Industrial Average has increased 4.6% and closed at 30,199.87 on Dec 24.
Joe Biden’s Victory in Presidential Elections
The win of Democratic candidate Joe Biden in the U.S. presidential polls proved to be a shot in the arm for the market that was bearing the brunt of pandemic adversities. The positive investor sentiments got a further boost when Biden decided to select former Fed chairperson Janet Yellen as his treasury secretary. A veteran with a three-decade experience of implementing various economic policies behind her, Yellen’s nomination appeared to be Biden’s masterstroke.
Pledging to revitalize America’s economy, Biden’s triumph could accelerate mergers and acquisition activity in the days to come. Also, the Democratic leader proposed $2-$4.2 trillion of additional measures to tackle the economic disruptions caused by the global health emergency.
Rollout of Pfizer Vaccine
The Dow stocks crossed the 30,000 mark in early December when Pfizer announced the initial administration of COVID-19 vaccines across the United Kingdom. With the Food and Drug Administration green lighting the vaccine for inoculation, it is likely to be shipped and distributed to various European Union (EU) countries like Austria, France, Italy and Germany. These countries intend to start the vaccination drive on Dec 27.
It is worth mentioning that Pfizer and BioNTech SE, its German ally, were the first to exhibit upbeat medical data on the back of successful clinical trials of their coronavirus vaccine candidate. In fact, both companies recently completed the Phase 3 study of the COVID-19 vaccine wherein the vaccine shot was apparently found to be more than 90% effective among volunteers. With no major complications observed, Pfizer remains confident of its vast cold-chain infrastructure on the back of its valuable insights to manufacture up to 1.3 billion doses by the end of 2021.
COVID-19 Stimulus Package
The Dow index jumped more than 300 points on Dec 15 after Congress leaders, namely Mitch McConnell, Nancy Pelosi, Chuck Schumer and the House minority leader Kevin McCarthy reached an agreement to clinch a stimulus package deal worth $900 billion. The stimulus for COVID-19 relief, which was finally secured on Dec 21 after much negotiation, is planned to provide a cushion to Americans with immediate unemployment perks and vaccine distribution.
Apart from offering financial aid to the state and local governments, this economic grant promises to stabilize businesses hurt by the COVID-19 chaos in the United States. The landmark step lends a boost to investors, especially at a time when prospects of economic growth are clouded by a dreary near-term outlook. With much hullaballoo surrounding the stimulus deal, investors and Congress leaders pose faith in their approach to make it a huge success.
Top 5 Dow Picks
Supported by such favorable feelers, we selected five Dow stocks, which drove the index in 2020. These stocks presently carry either a Zacks Rank # 2 (Buy) or 3 (Hold) with a market capitalization of more than $1 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Microsoft Corporation (MSFT - Free Report) : Based in Redmond, WA, Microsoft is a blue-chip technology company that dominates the PC software market with more than 80% of the market share for operating systems. Its product portfolio consists of cross-device productivity applications, business solution applications and video games to name a few. The company is primarily benefiting from a solid traction in Azure and Microsoft Teams, triggered by coronavirus-led work-from-home plus online learning wave and tele healthcare trends. It is also consistently enjoying a strong customer engagement with a considerable uptick in gaming services. Banking on these tailwinds, Microsoft is likely to sustain its winning streak in 2021 as well.
With a market capitalization of $1,684.1 billion, shares of this presently Zacks Rank #2 company have gained 41.2% compared with industry’s growth of 37.4% in the year-to-date period. It has a long-term earnings growth expectation of 13.2%. Microsoft’s bottom line surpassed estimates in each of the trailing four quarters, the average being 12.4%. Its earnings estimates have been revised 5.8% and 3.1% upward in the past 60 days for fiscal 2021 and 2022, respectively.
The Goldman Sachs Group, Inc. (GS - Free Report) : Headquartered in New York, NY, Goldman Sachs is a multinational investment banking company that provides asset management and securities underwriting services to a diversified client base. The company is well poised to benefit from expense-reduction initiatives while maintaining a strong franchise and investing in new opportunities. Backed by a solid capital position, Goldman consistently enhanced its shareholders’ value with steady capital-deployment activities. Markedly, organic growth, business diversification, cost management and completed mergers & acquisitions are expected to give it a further competitive edge over its peers while boosting its business roadmap simultaneously in 2021.
With a market capitalization of $88.1 billion, shares of this currently Zacks #2 Ranked company have gained 11.4% compared with industry’s growth of 20.1% in the year-to-date period. It has a long-term earnings growth expectation of 11.3%. Goldman Sachs’ bottom line topped estimates thrice in the trailing four quarters, the earnings surprise being 32.8%, on average. Its earnings estimates have been revised 0.4% and 3.7% upward in the past 60 days for fiscal 2020 and 2021, respectively.
NIKE, Inc. (NKE - Free Report) : Beaverton, OR-based Nike is a global leader in athletic footwear, apparel, equipment and sports-related accessories with operations in more than 160 countries. Driven by a strong brand portfolio including Nike Pro, Nike+ and Air Jordan, the company offers premium and well-designed products, in line with the latest customer trends. Despite the COVID-19 turmoil, it generated majority of its revenues from the digital business. Management believes that digital acceleration reflects a strategic shift toward a new future marketplace. Even as stores reopen, NIKE continues to witness robust digital trends, which demonstrate the strength of its brands and investments in improving the digital consumer experiences on the back of its sturdy liquidity. These healthy dynamics are expected to significantly boost NIKE’s growth potential in the post pandemic world while witnessing a solid traction across the global markets in 2021.
With a market capitalization of $222.3 billion, shares of this presently Zacks Rank #3 company have gained 39.8% compared with industry’s growth of 34.8% in the year-to-date period. It has a long-term earnings growth expectation of 19.3%. Its earnings estimates have been moved 4.9% and 4.4% north in the past 60 days for fiscal 2021 and 2022, respectively.
Walmart Inc. (WMT - Free Report) : Domiciled in Bentonville, AR, Walmart is an omnichannel retailer that operates variety stores, discount stores and Neighborhood Markets along with the websites, namely walmart.com and samsclub.com. Markedly, the company is benefiting from rising demand for essential items amid COVID-19 pandemic. With a strong record of comparable store sales and robust e-commerce initiatives, Walmart is making several strategic efforts to enhance merchandise assortments. Also, partnership with Shopify and JD.com, acquisitions of Bonobos, Moosejaw and Parcel, delivery programs like Walmart + and investment in its online e-commerce platform Flipkart are remarkable. Bolstered by such notable endeavors, the company is well poised to keep pace with the dynamic retail ecosystem while remaining competitive in the presence of rivals like Target and Amazon in 2021.
With a market capitalization of $406 billion, shares of the presently Zacks #3 Ranked company have gained 20.8% compared with industry’s growth of 19.3% in the year-to-date period. It has a long-term earnings growth expectation of 5.5%. Walmart’s bottom line surpassed estimates in three of the trailing four quarters, the average beat being 11.1%. Its earnings estimates have been revised 3.8% and 1.6% upward in the past 60 days for fiscal 2021 and 2022, respectively.
Caterpillar Inc. (CAT - Free Report) : Based in Deerfield, IL, Caterpillar is the largest global manufacturer of construction and mining equipment that caters to a variety of sectors, such as oil & gas, infrastructure and transportation. With a strong liquidity position, the company undertook several cost-control measures in the wake of the global pandemic including suspending 2020 base salary hikes of the top brass and reducing discretionary expenses that are expected to retain its near-term margins. It continues to monitor its end-user demand, dealer inventory, commercial shipments and plans to adjust production levels accordingly with incremental investments in its digital capabilities. These factors are likely to be Caterpillar’s key catalysts for its top-line performance in 2021.
With a market capitalization of $97.6 billion, shares of this currently Zacks Rank #3 company have gained 21.6% compared with industry’s growth of 21.1% in the year-to-date period. It has a long-term earnings growth expectation of 12%. Caterpillar’s earnings exceeded estimates thrice in the trailing four quarters, the earnings surprise being 18.6%, on average. Its earnings estimates have been raised 1.9% and 2.2% in the past 60 days for fiscal 2020 and 2021, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
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Top 5 Dow Stocks That Helped the Index Gain in 2020
The global economy has been reeling under the daily spike in coronavirus cases, suffering massive losses. Despite central banks imposing emergency interest rate cuts to support employment and market growth, negative investor sentiments took center stage for most part of the year. As a consequence, Wall Street witnessed its fastest bear market crash in history during March 2020, per a Business Insider article.
On the flip side, we see a silver lining regardless of the stories of gloom and doom floating around, as we draw the curtains on a grim year. Notably, three major stimulants to global markets in 2020 significantly drove the Dow stocks, which are victory of the U.S. president-elect Joe Biden, joint rollout of the first COVID-19 vaccine shots by Pfizer and BioNTech and a stimulus package offered for COVID-19 relief. On a year-to-date basis, the Dow Jones Industrial Average has increased 4.6% and closed at 30,199.87 on Dec 24.
Joe Biden’s Victory in Presidential Elections
The win of Democratic candidate Joe Biden in the U.S. presidential polls proved to be a shot in the arm for the market that was bearing the brunt of pandemic adversities. The positive investor sentiments got a further boost when Biden decided to select former Fed chairperson Janet Yellen as his treasury secretary. A veteran with a three-decade experience of implementing various economic policies behind her, Yellen’s nomination appeared to be Biden’s masterstroke.
Pledging to revitalize America’s economy, Biden’s triumph could accelerate mergers and acquisition activity in the days to come. Also, the Democratic leader proposed $2-$4.2 trillion of additional measures to tackle the economic disruptions caused by the global health emergency.
Rollout of Pfizer Vaccine
The Dow stocks crossed the 30,000 mark in early December when Pfizer announced the initial administration of COVID-19 vaccines across the United Kingdom. With the Food and Drug Administration green lighting the vaccine for inoculation, it is likely to be shipped and distributed to various European Union (EU) countries like Austria, France, Italy and Germany. These countries intend to start the vaccination drive on Dec 27.
It is worth mentioning that Pfizer and BioNTech SE, its German ally, were the first to exhibit upbeat medical data on the back of successful clinical trials of their coronavirus vaccine candidate. In fact, both companies recently completed the Phase 3 study of the COVID-19 vaccine wherein the vaccine shot was apparently found to be more than 90% effective among volunteers. With no major complications observed, Pfizer remains confident of its vast cold-chain infrastructure on the back of its valuable insights to manufacture up to 1.3 billion doses by the end of 2021.
COVID-19 Stimulus Package
The Dow index jumped more than 300 points on Dec 15 after Congress leaders, namely Mitch McConnell, Nancy Pelosi, Chuck Schumer and the House minority leader Kevin McCarthy reached an agreement to clinch a stimulus package deal worth $900 billion. The stimulus for COVID-19 relief, which was finally secured on Dec 21 after much negotiation, is planned to provide a cushion to Americans with immediate unemployment perks and vaccine distribution.
Apart from offering financial aid to the state and local governments, this economic grant promises to stabilize businesses hurt by the COVID-19 chaos in the United States. The landmark step lends a boost to investors, especially at a time when prospects of economic growth are clouded by a dreary near-term outlook. With much hullaballoo surrounding the stimulus deal, investors and Congress leaders pose faith in their approach to make it a huge success.
Top 5 Dow Picks
Supported by such favorable feelers, we selected five Dow stocks, which drove the index in 2020. These stocks presently carry either a Zacks Rank # 2 (Buy) or 3 (Hold) with a market capitalization of more than $1 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Microsoft Corporation (MSFT - Free Report) : Based in Redmond, WA, Microsoft is a blue-chip technology company that dominates the PC software market with more than 80% of the market share for operating systems. Its product portfolio consists of cross-device productivity applications, business solution applications and video games to name a few. The company is primarily benefiting from a solid traction in Azure and Microsoft Teams, triggered by coronavirus-led work-from-home plus online learning wave and tele healthcare trends. It is also consistently enjoying a strong customer engagement with a considerable uptick in gaming services. Banking on these tailwinds, Microsoft is likely to sustain its winning streak in 2021 as well.
With a market capitalization of $1,684.1 billion, shares of this presently Zacks Rank #2 company have gained 41.2% compared with industry’s growth of 37.4% in the year-to-date period. It has a long-term earnings growth expectation of 13.2%. Microsoft’s bottom line surpassed estimates in each of the trailing four quarters, the average being 12.4%. Its earnings estimates have been revised 5.8% and 3.1% upward in the past 60 days for fiscal 2021 and 2022, respectively.
The Goldman Sachs Group, Inc. (GS - Free Report) : Headquartered in New York, NY, Goldman Sachs is a multinational investment banking company that provides asset management and securities underwriting services to a diversified client base. The company is well poised to benefit from expense-reduction initiatives while maintaining a strong franchise and investing in new opportunities. Backed by a solid capital position, Goldman consistently enhanced its shareholders’ value with steady capital-deployment activities. Markedly, organic growth, business diversification, cost management and completed mergers & acquisitions are expected to give it a further competitive edge over its peers while boosting its business roadmap simultaneously in 2021.
With a market capitalization of $88.1 billion, shares of this currently Zacks #2 Ranked company have gained 11.4% compared with industry’s growth of 20.1% in the year-to-date period. It has a long-term earnings growth expectation of 11.3%. Goldman Sachs’ bottom line topped estimates thrice in the trailing four quarters, the earnings surprise being 32.8%, on average. Its earnings estimates have been revised 0.4% and 3.7% upward in the past 60 days for fiscal 2020 and 2021, respectively.
NIKE, Inc. (NKE - Free Report) : Beaverton, OR-based Nike is a global leader in athletic footwear, apparel, equipment and sports-related accessories with operations in more than 160 countries. Driven by a strong brand portfolio including Nike Pro, Nike+ and Air Jordan, the company offers premium and well-designed products, in line with the latest customer trends. Despite the COVID-19 turmoil, it generated majority of its revenues from the digital business. Management believes that digital acceleration reflects a strategic shift toward a new future marketplace. Even as stores reopen, NIKE continues to witness robust digital trends, which demonstrate the strength of its brands and investments in improving the digital consumer experiences on the back of its sturdy liquidity. These healthy dynamics are expected to significantly boost NIKE’s growth potential in the post pandemic world while witnessing a solid traction across the global markets in 2021.
With a market capitalization of $222.3 billion, shares of this presently Zacks Rank #3 company have gained 39.8% compared with industry’s growth of 34.8% in the year-to-date period. It has a long-term earnings growth expectation of 19.3%. Its earnings estimates have been moved 4.9% and 4.4% north in the past 60 days for fiscal 2021 and 2022, respectively.
Walmart Inc. (WMT - Free Report) : Domiciled in Bentonville, AR, Walmart is an omnichannel retailer that operates variety stores, discount stores and Neighborhood Markets along with the websites, namely walmart.com and samsclub.com. Markedly, the company is benefiting from rising demand for essential items amid COVID-19 pandemic. With a strong record of comparable store sales and robust e-commerce initiatives, Walmart is making several strategic efforts to enhance merchandise assortments. Also, partnership with Shopify and JD.com, acquisitions of Bonobos, Moosejaw and Parcel, delivery programs like Walmart + and investment in its online e-commerce platform Flipkart are remarkable. Bolstered by such notable endeavors, the company is well poised to keep pace with the dynamic retail ecosystem while remaining competitive in the presence of rivals like Target and Amazon in 2021.
With a market capitalization of $406 billion, shares of the presently Zacks #3 Ranked company have gained 20.8% compared with industry’s growth of 19.3% in the year-to-date period. It has a long-term earnings growth expectation of 5.5%. Walmart’s bottom line surpassed estimates in three of the trailing four quarters, the average beat being 11.1%. Its earnings estimates have been revised 3.8% and 1.6% upward in the past 60 days for fiscal 2021 and 2022, respectively.
Caterpillar Inc. (CAT - Free Report) : Based in Deerfield, IL, Caterpillar is the largest global manufacturer of construction and mining equipment that caters to a variety of sectors, such as oil & gas, infrastructure and transportation. With a strong liquidity position, the company undertook several cost-control measures in the wake of the global pandemic including suspending 2020 base salary hikes of the top brass and reducing discretionary expenses that are expected to retain its near-term margins. It continues to monitor its end-user demand, dealer inventory, commercial shipments and plans to adjust production levels accordingly with incremental investments in its digital capabilities. These factors are likely to be Caterpillar’s key catalysts for its top-line performance in 2021.
With a market capitalization of $97.6 billion, shares of this currently Zacks Rank #3 company have gained 21.6% compared with industry’s growth of 21.1% in the year-to-date period. It has a long-term earnings growth expectation of 12%. Caterpillar’s earnings exceeded estimates thrice in the trailing four quarters, the earnings surprise being 18.6%, on average. Its earnings estimates have been raised 1.9% and 2.2% in the past 60 days for fiscal 2020 and 2021, respectively.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Start Your Access to the New Zacks Top 10 Stocks >>