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Investment Ideas

June signifies the start of summer trading for investors and traders. With volume and volatility at the lows of the year, seasoned market participants know this is the time to slow things down. The next three months will have moments for increased trading, but with the exception of  earnings, the fed announcements and the Brexit vote, it looks to be a dull summer.

That doesn’t mean that investors should just ignore the market all together. Blue chips offer a boring way to be invested in a market that is shaping up to be just that for the next three months, boring.

Below I list five top ranked Dow stocks that have potential to head higher this summer. These are all Zacks Ranked #1(Strong Buy) or #2 (Buy) that should be bought, especially on dips.

Wal-Mart (WMT - Free Report) is a Zacks Rank #2 (Buy) that is a popular low price international retailer. The Arkansas based company engages in the operation of mass merchandising stores, which serve their customers primarily through the operation of three segments, which are the Wal-Mart Stores segment, the SAM'S Club segment and the International segment.

Wal-mart has a market cap of $221 Billion and a forward PE of 17. The stock sports Style Scores of “A” in Value, Growth and Momentum and pays a 2.84% dividend.

Last quarter Wal-mart surprised investors with a large EPS beat. The company saw $0.98 verse the $0.88 expected along with a beat on revenue. In addition they guided Q2 higher, seeing $0.95-1.08 verse the $0.99 expected.

Investors responded positively as the stock jumped over 10% and it has held onto gains since. This isn’t a move commonly seen among a large company like Wal-mart, look for the momentum to continue over the summer as estimates are being revised higher.

DuPont (DD - Free Report) is a Zacks Rank #2 (Buy) that is involved in science and technology in a range of disciplines including high-performance materials, specialty chemicals, pharmaceuticals and biotechnology. The Delaware based company operates globally through strategic business units. Within the strategic business units, businesses manufacture and sell a wide range of products to many different markets, including the transportation, textile, construction, automotive, agricultural and hybrid seeds, nutrition and health, pharmaceuticals, packaging and electronics markets.

DuPont is valued at $58 Billion and has a forward PE of 21. The stock sports a Zacks Style Scores of “A” in Momentum and pays a 2.29% dividend.

In late April DuPont raised fiscal year 2016 guidance to decline by low single digits, rather than mid-single digits. While still negative, investors took the news as a positive and bought the stock up over 2%. The company will go for its fourth straight EPS beat only July 26th.

Home Depot (HD - Free Report) is a Zacks Rank #2 (Buy) that is a popular home improvement retailer, operatoing in the USA, Canada, Chile, Puerto Rico, and Argentina. The Atlanta based company  operates The Home Depot stores that sell various building materials, home improvement products, and lawn and garden products, as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me (DIFM), and professional customers.

Home depot has a market cap of $164 Billion and a forward PE of 21. The stock sports Style Scores of “B” in Value and “A” in both Growth Momentum. The company pays a 2.09% dividend

Om May 17th he company announce Q1 earnings of $1.44 verse the $1.33 and saw revenue of 22.8 Billion verse the 22.1 Billion expected. In addition, they also raised fiscal year 2016 guidance to $6.27 verse the $6.20 street expectation.

While the numbers looked great, the stock sold off almost 4% confusing investors as to why. The stock still remains at those post earnings levels and with estimate revisions heading higher for the current year, this looks to be an opportunity to buy.

United Health (UNH - Free Report) is a Zacks Rank #2 (Buy) operates as a diversified health and well-being company in the United States.  The Minnesota based company's products and services reflect a number of core capabilities, including medical information management, health benefit administration, care coordination, risk assessment and pricing, health benefit design and provider contracting

United has a market cap of $128 Billion and a forward PE of 17. The stock sports Style Scores of “A” in Value and Growth and pays a 1.49% dividend.

In early May United posted a 5 cent beat on EPS, while revenues came in line. In addition the company also affirmed fiscal year 2016 of at least $8.85 verse the $8.87 expected.

Investors responded positively buying the stock up over 5%. Earnings are on July 21st, when the company will go for another EPS beat.

Johnson & Johnson (JNJ - Free Report) is a Zacks Rank #2 (Buy) that researches and develops, manufactures, and sells various products in the health care field worldwide. It operates through three segments: Consumer, Pharmaceutical, and Medical Devices.

J&J has a market cap of $310 Billion and a forward PE of 17. The stock sports Style Scores of “C” in Value and Growth and “B” in Momentum. It also pays out a dividend of 2.84%

The company reported on April 19th with a 4 cent beat and a slight beat on revenue. In addition, they raised fiscal year 2016 to $6.53-6.68 verse $6.52 expected.

Investors responded positively buying the stock up 2% over the next couple days. Next earnings report is on July 12th and looking at estimates, they are being revised higher for both the current quarter and year. 

In Summary

There is an old saying “Don’t short a dull market”. If this low volatility environment continues, expect most Dow stocks to drift higher as money slowly flows into bigger companies. Stocks that are performing fundamentally have an even better chance of heading higher and outperforming the market.

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