Chronicle Journal: Finance

3 Best Dow Jones Stocks to Buy for December

The Dow Jones Industrial Average (DJIA) notched its best one-month performance since January 1987 bolstered by the vaccine breakthroughs. Some of the leaders in the DJIA were Nike (NKE), Visa (V) and Walmart (WMT). These 3 stocks are still well-positioned to deliver solid returns in the upcoming months.

The Dow Jones Industrial Average (DJIA) rallied to record levels in November, reaching 30,000 for the first time in history, notching its four weeks of consecutive gains. The performance was primarily due to the progress on the coronavirus vaccine front and the Trump administration’s agreement to start the transition process for President-elect Joe Biden to take charge. This level reached by DJIA is amazing, especially in a year in which the economy was hit hard by the economic fallout from the coronavirus pandemic.

The progress on the vaccine front could lead to a big stock rally in the upcoming months. As the US economy is making progress at climbing out of a pandemic-driven recession, some of the DJIA stocks are expected to reach fresh highs.

Nike, Inc. (NKE), Visa Inc. (V) and Walmart Inc. (WMT) are some of the best stocks in the DJIA index to buy for December because of their growing market share and fundamental strength.

Nike, Inc. (NKE)

NKE, a sports footwear and apparel giant, has managed to retain the top spot within its industry for many years. The company’s online business is booming as consumers are turning to its website and app to shop for sneakers and workout apparel, even during the pandemic.

Nike has stepped up its direct-to-consumer online strategy amid the pandemic, developing its workout app to drive digital sales.  The company’s direct sales increased 13% year-over-year (on a currency-neutral basis) to $3.70 billion in the fiscal first quarter ended August 2020. Net income grew 11% from the year-ago value to $1.50 billion, while EPS rose 11% year-over-year.

The consensus EPS estimate of $0.75 for the next quarter ending February 2021 indicates a 41.5% increase year-over-year. Moreover, NKE beat the street EPS estimates in three out of trailing four quarters, which is impressive. The consensus revenue estimate of $10.80 billion for the next year indicates a 7% increase from the same period last year. The stock has gained 33.8% year-to-date.

How does NKE stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Peer Grade

A for Industry Rank

A for Overall POWR Rating.

You can’t ask for better. It is also ranked #1 out of 34 stocks in the Athletics & Recreation industry.

Visa Inc. (V)

V, a leading digital payments technology company, has witnessed a rise in digital transactions globally this year. On November 23rd, V announced a strategic partnership with Conferma Pay to launch Visa Commercial Pay. This venture aims to help businesses quickly digitize B2B payments. 

On November 21st, the company announced that it has completed the acquisition of YellowPepper, a leading financial start-up in Latin America. This will accelerate V’s adoption of ‘network of networks’ strategy to help support the current and future needs of its clients around the world.

V’s data processing revenue increased 4% year-over-year to $2.90 billion in the third quarter ended September 2020. Operating income rose 4.8% sequentially to $3.14 billion over this period.

The consensus EPS estimate of $5.45 for the current year indicates an 8.1% improvement year-over-year. Moreover, V beat the street EPS estimates in three out of trailing four quarters, which is impressive. The consensus revenue of $23.22 billion for the current year indicates a 6.3% increase from the year-ago value. The stock has gained 11.9% year-to-date.

V’s strong fundamentals are reflected in its POWR Ratings. It has a “Strong Buy” rating with an “A” for Trade Grade, Peer Grade, Buy & Hold Grade and Industry Rank. It is ranked #1 out of 46 stocks in the Consumer Financial Services industry.

Walmart Inc. (WMT)

WMT, a leading retail corporation, has performed impressively this year. The pandemic created a huge opportunity for the company to develop its digital presence, after dominating the retail industry. The company recently launched Walmart+, a membership program with lucrative features like unlimited free delivery, fuel discounts and Scan & Go. This launch, ahead of the holiday season, is likely to keep the retail giant well placed amid competitive forces from Amazon (AMZN).

On November 12th, WMT announced the launch of Walmart Pet Care and Walmart Pet Insurance to bring customers trusted pet care programs in one place. As adoption rates soar as a result of the pandemic, the launch of this expanded pet care service will allow the company to boost its revenue substantially.

WMT’s revenue increased 5.2% year-over-year to $134.70 billion for the third quarter ended October 2020. Operating income grew 22.5% from the year-ago value to $5.80 billion, while EPS rose 56% from the prior-year quarter to $1.81.

The consensus EPS estimate of $1.49 for the current quarter ending January 2021 indicates an 8% increase year-over-year. Moreover, WMT has an impressive earnings surprise history, as it beat the street EPS estimates in three out of trailing four quarters. The consensus revenue estimate of $147.82 billion for the current quarter indicates a 4.3% increase year-over-year. The stock has gained 26.7% year-to-date.

It’s no surprise that WMT is rated “Strong Buy” in our POWR Ratings system. It has an “A” for Trade Grade, Buy & Hold Grade and Industry Rank, and a “B” for Peer Grade. Among the 18 stocks in the Grocery/Big Box Retailers industry, it is ranked #1.

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NKE shares were trading at $136.96 per share on Thursday afternoon, up $1.38 (+1.02%). Year-to-date, NKE has gained 36.20%, versus a 15.56% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.


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