The Dow Jones Industrial Average is a stock index comprised of 30 of the largest, most widely held blue-chip stocks in America. Inclusion in the “Dow 30” is considered to be prestigious and a sign that a company is a leading business. This helps to explain why many of the oldest companies in the U.S. are part of the Dow. And, to be sure, the Dow Jones Industrial Average has a track record of outperforming other indexes during a downturn. This year, for example, the Dow has declined 8% compared to an 18% drop in the S&P 500 index and a 30% pullback in the Nasdaq. That said, not every stock included in the Dow is a winner. Some of the companies included in the index have been real stinkers, with a few underperforming for long stretches of time. Here are three Dow stocks to sell right now… and one to buy.
|Walgreens Boots Alliance
Dow Stocks to Sell Right Now: Boeing (BA)
American aircraft manufacturer Boeing (NYSE:BA) has done its best to put the multiple crashes of its 737 MAX aircraft behind it. The company moved its headquarters from Chicago to Arlington, Virginia and made multiple financial settlements, including establishing a $500 million fund to compensate the families of those who died in the crashes, and paying nearly $2 billion in government fines and compensation to airlines whose aircraft orders were delayed.
However, the company’s stock has not yet recovered from the ordeal. Over the past five years, BA stock has lost 34% of its value and now trades at $173 a share. Investors who’ve hung on waiting for the stock to recover have been disappointed.
To be sure, the company remains one of only two, major aircraft manufacturers in the world along with Airbus SE (EPA:AIR) of France. And the company continues to get robust orders for its aircraft. But it seems that investors’ trust in Boeing has been irrevocably shaken.
Dow Inc. (DOW)
Michigan-based chemical company Dow Inc. (NYSE:DOW) was spun off by DowDuPont in 2019, which is when Dow Inc became a publicly traded company and its stock was promptly added to the Dow Jones Industrial Average. Since its IPO three years ago, DOW stock has only gained a slight 3%. At its current price of $49.60, the stock is trading only $1 above the $48.60 per share price at which it closed on its first trading day.
Dow is extremely diversified, making products ranging from artificial turf and the stuff found in golf balls to adhesives, coatings, herbicides, insecticides, and chemicals used in automotive manufacturing. And the company is profitable and a market leader. It just reported a third-quarter profit of $739 million, or $1.02 per share, ahead of Wall Street analysts’ average forecasts.
But it seems that DOW stock has had trouble capturing the interest of investors. As a result, the share price seems to be treading water, making it a Dow stock to sell right now.
Dow Stocks to Sell Right Now: Walgreens Boots Alliance (WBA)
Retail pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) has been a chronic underperformer. Over the past five years, the company’s stock is down 43%. WBA stock hit an all-time high of nearly $100 in 2015. Since then, it has been all down hill for the company and its shareholders. Today Walgreens’ stock trades at $40.
The lack of progress by the shares appears to be the result of WBA’s low rate of diversification and its failed attempts at innovation. As if to compensate for years of underperformance, Walgreens has been in overdrive lately, announcing in 2021 that it would spend $5.2 billion to purchase the primary care company VillageMD, and announcing a plan to open 1,000 VillageMD primary care locations in its outlets by 2027.
While the initiatives are aimed at reinvigorating Walgreens Boots Alliance and WBA stock, the aggressive moves seem to have had the opposite affect, spooking investors and analysts who are concerned about overspending and an overly aggressive expansion.
One Dow Stock To Buy Right Now: McDonald’s (MCD)
The Golden Arches is a pretty safe bet. Even when the economy is in a slowdown or it’s shut down, as was the case during the pandemic, people still enjoy their McDonald’s (NYSE:MCD) meals. That loyalty helps to power McDonald’s sales and stock through boom and bust cycles. This year, MCD stock is up 2%.
While that might not sound impressive, it is when one considers that the S&P 500 index is down 18% on the year. Over the past 12 months, McDonald’s stock has gained nearly 10% (again, that’s better than most stocks have done), and the share price is up 62% over five years.
In addition to its loyal customers, McDonald’s also benefits from a culture of innovation and the fact that the company is constantly experimenting and changing its menu. Currently, McDonald’s is undertaking a farewell tour for the much beloved McRib sandwich, testing Krispy Kreme doughnuts at its locations, and has launched a line of Happy Meals targeted at adults.
Plus, the company just reported an earnings print that beat Wall Street’s average expectations — again. Globally, the company’s same-store sales rose 10% year-over-year in Q3. That’s not bad, since we’re in the midst of a rapidly slowing global economy.
The bottom line is that McDonald’s is a reliable blue-chip stock that provides consistent returns to shareholders in any type of market. Consequently, MCD stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.