All 30 Dow Stocks Ranked: The Analysts Weigh In
The Dow Jones Industrial Average - that elite group of 30 industry-leading dividend payers - is having a very good year. True, the blue-chip average has lost about 1,350 points since hitting an all-time closing high on July 15, but all told, the collection of Dow stocks still is up a healthy 12% for the year-to-date.
That's just on a price basis alone. Factor in dividends (the industrial average yields a decent-though-not-spectacular 2.1%), and the Dow has delivered a total return of 13% so far this year.
But not all Dow stocks are created equal. Although all these names have solid pedigrees, their short-to-intermediate term prospects diverge widely - at least as far as Wall Street analysts are concerned.
For investors who want to pick and choose among the bluest of blue chips, we sorted the Dow 30 by analysts' average recommendation. S&P Global Market Intelligence surveys analysts' stock calls and scores them on a five-point scale, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Any score lower than 3.0 (Hold) means that analysts, on average, rate the stock as being buy-worthy. The closer a score gets to 1.0, the better.
Here's a look at how analysts rate all 30 Dow stocks right now - and why.
3M
Market value: $94.2 billion
Dividend yield: 3.5%
Analysts' average recommendation: 3.0
Industrial conglomerate 3M (MMM, $163.71), which makes everything from adhesives to electric circuits, has been struggling on several fronts, including slower growth in China. Second-quarter results showed marked improvement after a disappointing first-quarter report clobbered the stock, but analysts remain cautious.
"While investors were clearly pleased that 3M is no longer perceived to be in fundamental free fall, we still expect it could take at least two quarters of successive material improvement in the company's absolute fundamental performance for investors to begin to regain confidence with 3M's operational execution and growth trajectory," note analysts at William Blair, who rate shares at Market Perform (Hold).
3M also recently disclosed an investigation into whether certain "expenditures may have violated the U.S. Foreign Corrupt Practices Act or other potentially applicable anti-corruption laws" in a government filing.
Analysts' average target price of $179.40 gives the Dow stock implied upside of 9.6% over the next 12 months or so, which explains the average recommendation of Hold.
If there's one thing investors can count on, however, it's 3M's dividend. The company has hiked its payout annually since 1959.
Walgreens Boots Alliance
Market value: $46.5 billion
Dividend yield: 3.5%
Analysts' average recommendation: 3.0
Sluggish revenue and earnings growth have analysts sitting on the fence when it comes to Walgreens Boots Alliance (WBA, $51.45). The largest U.S. pharmacy chain is forecast to post sales growth of just 2.7% next year, according to data from Refinitiv. Analysts forecast earnings to rise at an average annual rate of 2.1% over the next five years.
Of the 23 analysts covering Walgreens' stock tracked by S&P Global Market Intelligence, one rates it at Strong Buy, two say Buy, 17 call it a Hold, two have it at Underperform and one calls it a Sell. Their average price target stands at $58.65. After falling 6.6% in August, WBA now has implied upside of 14% over the next 12 months.
Analysts at Pivotal Research cite "stubborn" pressure on reimbursement rates for prescription medications as one reason for their Hold rating. Pivotal Research's Ajay Jain, who also has a Hold on Walgreens, says, "We expect a more moderate decline in EBITDA in FY20. In the meantime, the core decline in profitability remains around -10% even as sales metrics improved in the latest
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