The Dow Jones (^DJI) is made up of 30 of the most established and influential companies in the market. But even blue-chip stocks can struggle - some are dealing with slowing growth, outdated business models, or increasing competition.
Finding the best companies in the Dow Jones isn’t always straightforward, and that’s why we started StockStory. That said, here is one Dow Jones stock that will likely remain a market leader and two that may face some trouble.
Two Stocks to Sell:
Walmart (WMT)
Market Cap: $998.9 billion
Known for its large-format Supercenters, Walmart (NASDAQ: WMT) is a retail pioneer that serves a budget-conscious consumer who is looking for a wide range of products under one roof.
Why Does WMT Give Us Pause?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 5.3% over the last three years was below our standards for the consumer retail sector
- Commoditized inventory, bad unit economics, and high competition are reflected in its low gross margin of 24.9%
- Poor expense management has led to an operating margin of 4.3% that is below the industry average
At $125.65 per share, Walmart trades at 42.4x forward P/E. If you’re considering WMT for your portfolio, see our FREE research report to learn more.
Boeing (BA)
Market Cap: $160.9 billion
One of the companies that forms a duopoly in the commercial aircraft market, Boeing (NYSE: BA) develops, manufactures, and services commercial airplanes, defense products, and space systems.
Why Is BA Not Exciting?
- Large revenue base makes it harder to increase sales quickly, and its annual revenue growth of 7.2% over the last two years was below our standards for the industrials sector
- Suboptimal cost structure is highlighted by its history of operating margin losses
- Cash burn makes us question whether it can achieve sustainable long-term growth
Boeing is trading at $204.90 per share, or 868.5x forward P/E. Check out our free in-depth research report to learn more about why BA doesn’t pass our bar.
One Stock to Buy:
American Express (AXP)
Market Cap: $207.3 billion
Recognizable by its iconic green logo and the slogan "Don't leave home without it," American Express (NYSE: AXP) is a global payments company that issues credit and charge cards, processes merchant transactions, and offers travel and lifestyle benefits to consumers and businesses.
Why Are We Backing AXP?
- Market share has increased this cycle as its 16.4% annual revenue growth over the last five years was exceptional
- Share repurchases over the last five years enabled its annual earnings per share growth of 32.6% to outpace its revenue gains
- ROE punches in at 33.1%, illustrating management’s expertise in identifying profitable investments
American Express’s stock price of $302.71 implies a valuation ratio of 17.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
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