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Top 6 Dow Stocks That Have Outpaced Index's Year-to-Date Gain

Nalak Das

U.S. stocks are northbound since the beginning of 2019 albeit with some fluctuations. After completing the best first half in more than two decades, all the three major stock indexes —  the Dow, S&P 500 and Nasdaq Composite —  recorded their fresh all-time highs in October and are continuing their stellar run in November. Wall Street still has something to offer irrespective of the fact that the bull run is in its 11th year.

Dow Firmly in the Green

Barring some trade-related fluctuations, the Dow is firmly in the positive territory with a gain of 19.1% year to date. This is an excellent performance after a disappointing 2018, when the blue-chip index lost nearly 6%. Moreover, 21 components of the 30-stock index have given double-digit returns so far this year.

On Nov 13, the blue-chip index closed at 27,783.59, after setting a fresh all-time high. This level was well above its 50-day and 200-day moving averages of 26,975.89 and 26,331.05, respectively. 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 considered a long-term trend setter.

It is widely recognized in the technical analysis space that whenever the 50-day moving average line surges ahead of the 200-day moving average line, a long-term uptrend for the index becomes a strong possibility.

The Dow has completed three straight weeks of a winning streak and the index is on its way to complete four consecutive weeks in the green. Over the past month, the index has advanced 3.6%.

Near-Term Catalysts for the Dow

A fundamentally stable U.S. economy, which is growing for the historically longest 11 years, albeit with some loss in pace and a dovish monetary stance adopted by the Fed in 2019 are the two major drivers of the Dow. The central bank cut the benchmark interest rate by 75 basis points in 2019. Furthermore, the government bonds yield curve has steadied, eliminating fears of an impending recession.

U.S. consumer spending remained strong and the labor market remained firm with strong job addition and wage growth. Of late, some economic data have indicated a slow turnaround in U.S. manufacturing, which was hit hard due to the lingering tariff war with China. Last but not the least is the possibility of a partial trade deal with China this year that could be a major booster of market participant’s sentiment.

Our Top Picks

We have narrowed down our search to six Dow stocks that have rallied more than the index itself and still have upside left for the rest of 2019. All six stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

Microsoft Corp. MSFT is one of the largest broad-based technology providers in the world. Although software is the most-important revenue source, its offerings also include hardware and online services. Microsoft has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide.

The company’s expected earnings growth rate for the current year is 12.6%. The Zacks Consensus Estimate for the current year has improved 2.5% over the last 60 days. The stock has jumped 45% year to date and has a dividend yield of 1.25%.

The Home Depot Inc. HD is the world’s largest home improvement specialty retailer with over 2,200 retail stores across the globe, offering a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, and related services. It primarily serves home owners and professional renovators/remodelers, general contractors, handymen, property managers and building service contractors.

The company’s expected earnings growth rate for the current year is 2.3%. The Zacks Consensus Estimate for the current year has improved 0.1% over the last 60 days. The stock has soared 36.6% year to date and has a dividend yield of 2.33%.

The Procter & Gamble Co. PG provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming, Health Care, Fabric & Home Care, and Baby, Feminine & Family Care.

The company has an expected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for the current year has improved by 1.9% over the past 30 days. The stock has surged 31.2% year to date and has a dividend yield of 2.50%.

Walmart Inc. WMT operates retail stores, restaurants, discount stores, supermarkets, supercenters, hypermarkets, warehouse clubs, apparel stores, Sam’s Clubs, and NeighborhoodMarkets, as well as the websites, walmart.com and samsclub.com.

The company has an expected earnings growth rate of 0.2% for the current year. The Zacks Consensus Estimate for the current year has improved by 0.2% over the past 60 days. The stock has climbed 29.9% year to date and has a dividend yield of 1.78%.

Intel Corp. INTC is the world’s largest manufacturer of semiconductor products. It supplies to the computing and communications industries with microprocessors and system building blocks that are integral to computers and other connected devices, servers, and networking and communications products. Intel also offers associated hardware and software products, security products, and services.  

The company has an expected earnings growth rate of 0.7% for the current year. The Zacks Consensus Estimate for the current year has improved 5.5% over the last 30 days. The stock has rallied 23.3% year to date and has a dividend yield of 2.16%.

NIKE Inc. NKE is engaged in the business of designing, developing and marketing of athletic footwear, apparel, equipment and accessories, and services for men, women and children worldwide. Despite the volatile macroeconomic and geopolitical environment, NIKE expects to continue investing in key capabilities to aid digital transformation and deliver robust growth in fiscal 2020 and beyond.

The company has an expected earnings growth rate of 19.3% for the current year. The Zacks Consensus Estimate for the current year has improved 2.4% over the last 30 days. The stock has advanced 23.1% year to date and has a dividend yield of 0.98%.

Today's Best Stocks from Zacks

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