Bulls usually win over bears in the long-term. Can long-term value win over growth?

Picking stock winners is much harder than investing in index funds and exchange-traded funds. Still, many Tactical Bull efforts rely on juicing up returns within long-term investing strategies. That generally requires more effort in picking individual stocks or industry-ETFs than just writing out of the money call options to boost returns over time. So far, the Dow Jones Industrial Average is up just 4% year-to-date (YTD). That is a full 10-point lag behind the S&P 500 and NASDAQ-100 ETFs.

Tactical Bulls wanted to review the 30 Dow Jones Industrial Average stocks to see which stocks have the most implied upside for the rest of 2024 and into 2025. This effort measures a stock’s current price to the consensus analyst price target. It also takes each stock’s current dividend yield into account as a boost for total returns.

All in all, 9 of the 30 stocks were picked as these all have an implied upside of well above 10% for the coming 12-month period.

SOME DOW STOCKS ARE DOGS

This exercise should not in any way be interpreted as a guarantee to outpaced returns over the market in the coming six to twelve months. Some of these stocks are floundering and even seem to have few catalysts for upside. In fact, many of the stocks with the most implied upside have performed poorly as stocks and the analyst community may simply not have bitten the bullet hard enough with even lower expectations yet. And sometimes the analyst community are just collectively wrong in their outlook.

Do not forget that earnings season will start all over again in less than 30 days. That means the companies that put up more bad news may be punished even further while those looking to turn back around may start to look better again. Lastly, don’t forget that the Dow has no qualms about throwing laggards out to replace them with companies it believes will better represent the economy (and hopeful stock upside) in the years ahead.

SOME DOW STATS

Of the 30 Dow stocks, a total of 9 stocks (as of June 21, 2024) had implied upside of 10% or more to the consensus analyst price targets. Some other stocks have implied upside but were screened out for different reasons. Perhaps the biggest surprise was that only 4 of the Dow stocks had an implied upside of 20% or more just looking at the target prices alone.

Just to make certain that this stays fair and balanced rather than just showing a screen, Tactical Bulls kept this list of 9 Dow stocks in alphabetical order to prevent any perceived rankings or favoritism here in this screen. Additional blunt commentary has also been added for color around the current situation for each Dow stock to help prevent investors from falling into a trap thinking analyst target prices are the only things that matter.

Another interesting issue about consensus analyst prices is that all 30 Dow stocks still have implied upside to their collective price targets. That said, more than half of the Dow had implied upside of less than 10% without considering the dividends, and 7 of the targets as of June 21,2022 had less than 5% implied upside without considering their dividends.

AND HERE THEY ARE…

Amazon.com Inc. (NASDAQ: AMZN)
> Stock Price: $189.00
> Consensus Target: $221.78
> Dividend Yield: N/A
> Implied Upside (Incl. Dividend): 17.3%
> YTD Gain/Loss: +22.5%

Commentary: Amazon.com has traded within a $175 to $190 trading range for the better part of four months. It is a very recent addition to the Dow after a huge stock split. Even with a $1.9 trillion market cap, its gain of 22% so far in 2024 lags some of the mega-cap leaders taking more investor attention. Amazon’s businesses remain in tight competition and its recent investment in Anthropic for A.I. hasn’t garnered some of the same attention as has been seen around NVIDIA, Microsoft and OpenAI (ChatGPT). Is Amazon a hulking mass that is now hard to pivot? Or is it just a sleeping stock with an ability to rise much higher once investor interest elsewhere fades and allows the rest of the market to come back into favor?

Boeing Co. (NYSE: BA)
> Stock Price: $176.50
> Consensus Target: $213.45
> Dividend Yield: N/A (still suspended)
> Implied Upside (Incl. Dividend): 20.9%
> YTD Gain/Loss: -32%

Commentary: Boeing is a company in trouble due to ongoing plane woes. You might even think the public would be scared to fly if you haven’t seen how packed planes are now. It hasn’t even paid a dividend for years to conserve cash. Management hasn’t been fired unilaterally even with some top management changes on the horizon. The company even admitted it has retaliated against whistleblowers who said how bad things are. And in the not-so-distant future, Boeing will have Chinese planes to compete with for international orders on top of tight competition from the likes of Airbus. Maybe Boeing’s stock price of $260 in late-2023 and steady drop until April just means analysts haven’t adjusted prices lower enough yet.

Chevron Corporation (NYSE: CVX)
> Stock Price: $156.50
> Consensus Target: $183.76
> Dividend Yield: 4.2%
> Implied Upside (Incl. Dividend): 21.6%
> YTD Gain/Loss: +5%

Commentary: Chevron is now the only Big Oil remaining in the Dow. Its stock has mostly been caught in a trading range of $150 to $165 for most trading days this year. There seem to be few catalysts as oil has had a rough time hanging above $80/barrel (WTI). It is unpopular to have oil prices rise during elections and the administration has used the Strategic Petroleum Reserve hoping to prevent more price pressure at the gas pump. If oil heads toward $90 or $100, it’s likely a win for Chevron. If it slides back toward $70, sentiment may remain stale to weak. It is also possible that analyst price targets are still hanging higher from earlier in 2024 when shares rose from $145 to $165 as the stock is down $10 since peaking with a double-top pattern from April and May.

Intel Corporation (NASDAQ: INTC)
> Stock Price: $31.00
> Consensus Target: $39.73
> Dividend Yield: 1.66%
> Implied Upside (Incl. Dividend): 29.8%
> YTD Gain/Loss: -38%

Commentary: Owning Intel has not just been like watching paint dry. It has been worse as the largest Dow loser so far in 2024. The company managed to disappoint even weak and downtrodden expectations for foundry losses and Intel is fighting for relevance while NVIDIA wins on AI and AMD is winning on traditional processors with its prices. And no one seemed to care that its new A.I. chip offerings under the existing Xeon name were announced. Should Intel even still be a Dow stock? Intel may just be another situation where analysts have not lowered their price targets enough. Or maybe it has just sold off too much as sentiment is so negative. Almost every analyst call on Intel since April has been another price target cut — except for Wolfe Research, raising its rating to Peer Perform from Underperform in mid-May. Intel’s recent trading range of $29 to $32 would appear to be a pretty solid base, but it’s all going to depend on whether Intel’s relevance, revenue and earnings can improve. Intel’s stock outlook seems like a binary scenario where investors buying now will have a magical upside surprise or feel like they were just suckered into another value trap with no upside.

Johnson & Johnson (NYSE: JNJ)
> Stock Price: $148.00
> Consensus Target: $171.77
> Dividend Yield: 3.2%
> Implied Upside (Incl. Dividend): 18.7%
> YTD Gain/Loss: -5%

Commentary: Johnson & Johnson is a Dow stock where very little seems to be going on even with a $357 billion market cap. The company’s overhang from the talc fiasco seemed to be over for the most part, but headlines are still coming out on this. J&J is supposed to be defensive for investors in uncertain markets and uncertain economies but investors seem to not care. The next catalyst to entice investors remains elusive despite having raised dividends for 62 straight years. J&J’s stock chart is not all that exciting with shares down about 10% since March. Then again, it has shown some significant support around the $144 level on four different waves. One interesting issue about J&J is that its spin-off of Kenvue (NYSE: KVUE) is that it has slid steadily since its debut in 2023.

McDonald’s Corporation (NYSE: MCD)
> Stock Price: $258.00
> Consensus Target: $310.70
> Dividend Yield: 2.6%
> Implied Upside (Incl. Dividend): 23%
> YTD Gain/Loss: -12.5%

Commentary: McDonald’s has two significant headwinds at the present time. Inflation is first and optics are second. And then a third problem is perpetually rising wages. McDonald’s inflation problem is that it has raised prices handily during the higher food and labor costs in the last three years. Serious, they have to be glad the Big Mac Index hasn’t been updated for real in 2024 since January AND that the base currency in U.S. dollars keeps the U.S. as the baseline. The December 2023 Big Mac average in the U.S. of versus $4.89 in December 2020 shows a 16.3% price hike over 3 years but many other menu items are up far higher (by 40% since 2019 according to a McDonald’s executive). The wage issue in some states is creating higher and higher operating costs and McDonald’s seems to not be able to hire robotic workers and install robotic systems fast enough to fend off wage pressure. Even the states without crazy minimum wages for burger flippers have serious competition to attract workers with advertisements of high wages in their windows. The optical problem is that McDonald’s just somehow isn’t a cheap destination to eat now. The Golden Arches has even said it is seeing pushback and lower orders and fewer visits from lower-income consumers. Imagine a world that we have reached an inflection point where many people cannot afford to or won’t pay up for a McDonald’s meal.

Salesforce Inc. (NYSE: CRM)
> Stock Price: $244.35
> Consensus Target: $299.12
> Dividend Yield: 0.3%
> Implied Upside (Incl. Dividend): 22.4%
> YTD Gain/Loss: -7%

Commentary: Salesforce find itself at a strange time after another earnings disappointment. It can still win from A.I. offerings over time and it is deeply entrenched within the corporate IT world. That said, the newer AI offerings are sucking up much of IT budgets away from many entrenched leaders at this time. Many companies may look to consolidate how many different and redundant apps and software packages they have for employees and customers. Still, it’s stock recovery was strong enough that it was one of the Tactical Bull Winners of earnings season despite a bad loss.

UnitedHealth Group Inc. (NYSE: UNH)
> Stock Price: $484.00
> Consensus Target: $576.68
> Dividend Yield: 1.6%
> Implied Upside (Incl. Dividend): 20.8%
> YTD Gain/Loss: -8%

Commentary: Being the largest health insurer has come with ups and downs around earnings. UnitedHealth has seen its share of earnings news reaction take the stock lower, but then it seems to recover each time. A huge news wave and financial impacts from many companies regarding healthcare cyberattack impact from Change Healthcare hasn’t exactly helped things either as UnitedHealth’s CEO said maybe one-third of U.S. citizens may have had some of their data compromised. The ongoing high costs of new drugs seems to only be capping upside expectations, and rising health insurance premiums don’t seem to be adding meaningfully to shareholders facing higher costs.

Walt Disney Company (NYSE: DIS)
> Stock Price: $102
> Consensus Target: $124.93
> Dividend Yield: 0.67%
> Implied Upside (Incl. Dividend): 23.2%
> YTD Gain/Loss: +13%

Commentary: Walt Disney seems stuck and its rally from early in 2024 has fizzled. Its stock was recovering handily but holding above $120 was difficult even before shares gapped down big to $105 in May. Despite all that it is still up 13% YTD. It also seems hard to fathom that Disney’s stock is still only about half of its peak share price from 2021. Disney’s recent proxy victory over activist shareholder Nelson Peltz may prove to not really be much of a victory for shareholders. With operating costs rising, with half of consumers complaining about the direction of Disney’s content, what is a domestic level of peak-streaming, and with its “news organization” not really offering news instead of spin-bias it’s hard to feel the love for Disney at the moment. And to top it all off, traveling to and visiting a Disney theme park may have never been cheap but now it has become quite pricey when consumers are strapped for cash.

6-MONTH CHARTS

Tactical Bulls has also decided to add in a Candle Glance group of charts showing all 9 charts over the last 6-month period. This also dhows a “DIA” chart for the Dow ETF. This montage is courtesy of StockCharts.com.

Dow stocks courtesy of StockCharts.com