Back to top

Image: Bigstock

Buy 5 Dow Stocks to Strengthen Your Portfolio in 2019

Read MoreHide Full Article

Wall Street has been going through a rough patch in 2018 after providing fabulous returns in 2017. The Dow 30 – one of the three major stock indexes of the U.S. market – has been in red so far in 2018. The blue-chip index has been witnessing extreme volatility over the last three months on account of yield curve inversion, uncertainty over the Fed’s future monetary stance, conflicting news related to trade war between the United States and China, and concerns of a global economic slowdown.

However, a closer look into the index portrays a different picture. Not only have some of members provided better returns than the index year to date, these stocks also possess a favorable Zacks Rank. Consequently, it will be a good idea to add these stocks to your portfolios at the moment.

Holiday Retail Sales Hit Six-Year High

U.S. holiday retail sales have increased at their best pace in six years, according to preliminary data. Per Mastercard SpendingPulse, which tracks both online and in-store spending with all forms of payment, total U.S. retail sales jumped 5.1% from Nov 1 through Dec 24 from the year-ago period. Per the report, shoppers spent more than $850 billion this holiday season.

The jump can be attributed to robust online spending. Online sales have been helping retailers this holiday season. Online sales grew 26.4% from a year earlier between the Wednesday before Thanksgiving through Black Friday, per Adobe Analytics. Per Mastercard SpendingPulse, U.S. e-commerce sales grew 18.1% from Nov 1 through Dec 19 on a year-over-year basis. (Read More: Holiday Retail Sales Hit Six-Year High: 5 Stocks to Buy)

Crude Oil Prices Likely to Rebound in 2019

Crude oil prices are finally showing signs of recovery after they plunged to the lowest level since Jul 21, 2017 on Dec 24. However, the prices rebounded on Dec 26.

February contract of the U.S. benchmark Western Texas Intermediate (WTI) was up $4.69 or 8.6% to close at $46.22 a barrel on the New York Mercantile Exchange. Similarly, February contract of the global benchmark Brent Crude was up $4 or 7.9% to close at $46.22 on London’s ICE exchange.  It was the biggest single-day rise of both WTI and Brent crude oil price since Nov 30, 2016.

The decision of OPEC and Russia-led oil exporters to cut production levels, supply related problems in Iran and Libya, production cut in Canada and Qarter’s decision to leave the OPEC  are primary factors aiding recovery of crude oil prices.

Strong Economic Fundamentals

Fundamentals of the U.S. economy remain robust. The U.S. GDP grew 3.3% on an average in the first nine months of 2018, better than Trump administration’s 3% target growth rate. The fourth quarter is likely to maintain the momentum driven by strong labor market with record low unemployment and solid consumer and business confidence.

Our Top Picks

At this stage, it will be a prudent move to invest in Dow 30 stocks. Each of our picks has a Zacks Rank #2 (Buy) and provided better returns than the index so far in 2018. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The chart below shows price performance of our five picks year to date.

The Boeing Co. (BA - Free Report) : The company recorded positive earnings surprise of 28% in the last four quarters. It has expected earnings growth of 25% for current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.

Merck & Co. Inc. (MRK - Free Report) : The company recorded positive earnings surprise of 4% in the last four quarters. It has expected earnings growth of 9.1% for current year. The Zacks Consensus Estimate for the current year has improved by 0.5% over the last 60 days.

Walmart Inc. (WMT - Free Report) : The company recorded positive earnings surprise of 3% in the last four quarters. It has expected earnings growth of 8.8% for current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.

The Procter & Gamble Co. (PG - Free Report) : The company recorded positive earnings surprise of 28% in the last four quarters. It has expected earnings growth of 25% for current year. The Zacks Consensus Estimate for the current year has improved by 0.4% over the last 60 days.

American Express Co. (AXP - Free Report) : The company recorded positive earnings surprise of 3.2% in the last four quarters. It has expected earnings growth of 4.5% for current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the last 60 days.

In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?

These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>

Published in