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Top 5 Dow Stocks to Boost Your Portfolio in a Capricious Market
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Wall Street witnessed a spike in volatile trading last week primarily owing to a typical trading practice in which a few key heavily shorted stocks by hedge fund giants were favored by a group of individual investors organized via Reddit’s wallstreetbets forum. Moreover, a slower-than-expected rollout of COVID-19 vaccines also dented investors confidence to some extent.
A section of market participants have already raised concerns regarding a bubble in the market. All the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — suffered their worst weekly performance since October 2020 in last week.
The stock-market volatility is likely to continue in the days to come. Despite an unpredictable market, five Dow stocks with a favorable Zacks Rank are likely to provide solid returns in the near term. Investment in these stocks at this stage is likely to be prudent.
Markets May Remain Volatile in Near Future
Wall Street is expected to continue fluctuating in the near future as we are reeling under the resurgence of coronavirus and its newly found mutated strings. Nationwide vaccination is still a long way to go.
Moreover, the recent spike in prices of some highly shorted stocks fueled by the Reddit-based platform is spiraling into the metals market. On Feb 1, the prices of silver future surged 8% to $29.06 per ounce, marking the largest single-day gain on NYMEX since Feb 15, 2013.
Furthermore, discount online brokerage firm Robinhood said that it has mobilized $3.4 billion from retail investors since Jan 28 amid extreme market volatility. The figure exceeds the total amount that the online broker has raised since its inception in 2013.
Persistence of volatility is evident from the COBE VIX reading — popularly known as the best fear-gauge of Wall Street. In a nutshell, the VIX indicates market's expectation of a 30-day forward-looking volatility based on the near-term S&P 500 Index options (both puts and calls).
Notably, VIX is currently hovering in the range of 30 to 35 while it was in the range of 20 to 25 in December and January. At its current level, the fear gauge is well above its long-term reading at around 20.
At its current level of 30.24, the VIX is higher than its 50-day moving average of 23.47 and the 200-day moving average of 27.38. In financial literature, the 50-day moving average line is generally recognized as the short-term trend setter while the 200-day moving average is the long-term trend setter. This clearly indicates that the market will remain volatile and stocks may swing widely in either direction in the near future.
Our Top Picks
We have narrowed down our search to five Dow stocks that have strong growth potential for both short and long-term (3-5 years) and have witnessed robust earnings estimation revisions in the last 7 to 30 days. All these stocks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Apple Inc. 's (AAPL - Free Report) Services and Wearables businesses are expected to drive top-line growth in fiscal 2021 and beyond. Although its business primarily runs around its flagship iPhone, the Services portfolio has emerged as the new cash cow. The company's focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunities in the long haul.
The Zacks Rank #1 company has an expected earnings growth rate of 36.3% for the current year (ending September 2021). It has a long-term growth rate of 11.5%. The Zacks Consensus Estimate for the current year has improved 10.9% over the last 7 days.
The Goldman Sachs Group Inc.'s (GS - Free Report) key source of earnings stability is its business diversification. Within traditional banking, a diversified product portfolio has better chances of sustaining growth than many other banks, which have exited some of these areas. It operates in four segments: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management.
The Zacks Rank #1 company has an expected earnings growth rate of 15.4% for the current year. It has a long-term growth rate of 19.2%. The Zacks Consensus Estimate for the current year has improved 12.9% over the last 30 days.
Microsoft Corp. (MSFT - Free Report) has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide. The company has doubled down on the cloud computing opportunity. Moreover, it is one of the three largest providers of gaming hardware.
The Zacks Rank #2 company has an expected earnings growth rate of 26.9% for the current year (ending June 2021). It has a long-term growth rate of 11.9%. The Zacks Consensus Estimate for the current year has improved 8.6% over the last 7 days.
The Travelers Companies Inc. (TRV - Free Report) provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United states and internationally. It operates through three segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.
The Zacks Rank #2 company has an expected earnings growth rate of 10.6% for the current year. It has a long-term growth rate of 6.4%. The Zacks Consensus Estimate for the current year has improved 2.2% over the last 7 days.
Intel Corp. 's (INTC - Free Report) primary focus area is the data center and cloud, where it is doing everything possible to maintain its market share and profitability. It operates through Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Programmable Solutions Group, Client Computing Group and All Other segments.
Although the Zacks Rank #2 company has a negative expected earnings growth rate for the current year, it has a long-term growth rate of 7.5%. The Zacks Consensus Estimate for the current year has improved 6.2% over the last 30 days.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Image: Bigstock
Top 5 Dow Stocks to Boost Your Portfolio in a Capricious Market
Wall Street witnessed a spike in volatile trading last week primarily owing to a typical trading practice in which a few key heavily shorted stocks by hedge fund giants were favored by a group of individual investors organized via Reddit’s wallstreetbets forum. Moreover, a slower-than-expected rollout of COVID-19 vaccines also dented investors confidence to some extent.
A section of market participants have already raised concerns regarding a bubble in the market. All the three major stock indexes — the Dow, the S&P 500 and the Nasdaq Composite — suffered their worst weekly performance since October 2020 in last week.
The stock-market volatility is likely to continue in the days to come. Despite an unpredictable market, five Dow stocks with a favorable Zacks Rank are likely to provide solid returns in the near term. Investment in these stocks at this stage is likely to be prudent.
Markets May Remain Volatile in Near Future
Wall Street is expected to continue fluctuating in the near future as we are reeling under the resurgence of coronavirus and its newly found mutated strings. Nationwide vaccination is still a long way to go.
Moreover, the recent spike in prices of some highly shorted stocks fueled by the Reddit-based platform is spiraling into the metals market. On Feb 1, the prices of silver future surged 8% to $29.06 per ounce, marking the largest single-day gain on NYMEX since Feb 15, 2013.
Furthermore, discount online brokerage firm Robinhood said that it has mobilized $3.4 billion from retail investors since Jan 28 amid extreme market volatility. The figure exceeds the total amount that the online broker has raised since its inception in 2013.
Persistence of volatility is evident from the COBE VIX reading — popularly known as the best fear-gauge of Wall Street. In a nutshell, the VIX indicates market's expectation of a 30-day forward-looking volatility based on the near-term S&P 500 Index options (both puts and calls).
Notably, VIX is currently hovering in the range of 30 to 35 while it was in the range of 20 to 25 in December and January. At its current level, the fear gauge is well above its long-term reading at around 20.
At its current level of 30.24, the VIX is higher than its 50-day moving average of 23.47 and the 200-day moving average of 27.38. In financial literature, the 50-day moving average line is generally recognized as the short-term trend setter while the 200-day moving average is the long-term trend setter. This clearly indicates that the market will remain volatile and stocks may swing widely in either direction in the near future.
Our Top Picks
We have narrowed down our search to five Dow stocks that have strong growth potential for both short and long-term (3-5 years) and have witnessed robust earnings estimation revisions in the last 7 to 30 days. All these stocks carry either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year to date.
Apple Inc. 's (AAPL - Free Report) Services and Wearables businesses are expected to drive top-line growth in fiscal 2021 and beyond. Although its business primarily runs around its flagship iPhone, the Services portfolio has emerged as the new cash cow. The company's focus on autonomous vehicles and augmented reality/virtual reality technologies presents growth opportunities in the long haul.
The Zacks Rank #1 company has an expected earnings growth rate of 36.3% for the current year (ending September 2021). It has a long-term growth rate of 11.5%. The Zacks Consensus Estimate for the current year has improved 10.9% over the last 7 days.
The Goldman Sachs Group Inc.'s (GS - Free Report) key source of earnings stability is its business diversification. Within traditional banking, a diversified product portfolio has better chances of sustaining growth than many other banks, which have exited some of these areas. It operates in four segments: Investment Banking, Global Markets, Asset Management, and Consumer & Wealth Management.
The Zacks Rank #1 company has an expected earnings growth rate of 15.4% for the current year. It has a long-term growth rate of 19.2%. The Zacks Consensus Estimate for the current year has improved 12.9% over the last 30 days.
Microsoft Corp. (MSFT - Free Report) has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide. The company has doubled down on the cloud computing opportunity. Moreover, it is one of the three largest providers of gaming hardware.
The Zacks Rank #2 company has an expected earnings growth rate of 26.9% for the current year (ending June 2021). It has a long-term growth rate of 11.9%. The Zacks Consensus Estimate for the current year has improved 8.6% over the last 7 days.
The Travelers Companies Inc. (TRV - Free Report) provides a range of commercial and personal property, and casualty insurance products and services to businesses, government units, associations, and individuals in the United states and internationally. It operates through three segments: Business Insurance, Bond & Specialty Insurance, and Personal Insurance.
The Zacks Rank #2 company has an expected earnings growth rate of 10.6% for the current year. It has a long-term growth rate of 6.4%. The Zacks Consensus Estimate for the current year has improved 2.2% over the last 7 days.
Intel Corp. 's (INTC - Free Report) primary focus area is the data center and cloud, where it is doing everything possible to maintain its market share and profitability. It operates through Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, Programmable Solutions Group, Client Computing Group and All Other segments.
Although the Zacks Rank #2 company has a negative expected earnings growth rate for the current year, it has a long-term growth rate of 7.5%. The Zacks Consensus Estimate for the current year has improved 6.2% over the last 30 days.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>