There are many reasons for optimism as the U.S. economy continues improving. America’s GDP growth continued to move in the right direction and soared by 5.2% in the third quarter. That strongly suggests that the Dow, composed of 30 of the best U.S. stocks, is worth investing in at the moment.
Generally speaking, investing in the Dow currently makes a lot of sense. It appears that not only will America avoid a recession but also that there’s growth to be had. So, the Dow Jones index is a strong place to be for investors seeking U.S. equity exposure.
McDonald’s (MCD)
Simply put, McDonald’s (NYSE:MCD) continues to grow incredibly despite its dominant position and size. As mentioned, U.S. GDP grew by 5.2% during the 3rd quarter. Growth at McDonald’s was even higher.
McDonald’s is, of course, a very large firm with a vast footprint. Therefore, it’s necessary to divide its growth along several comparable metrics. Fortunately, they all point to the same conclusion: McDonald’s is thriving. Global sales increased by 8.8% during the Third quarter. In the US, sales increased by 8.1%. Global systemwide sales, which measures McDonald’s owned and operated restaurants and franchisee restaurants, grew by 11.1%. Those metrics should lead investors to the same conclusion: McDonald’s is growing even faster than the rebounding US economy.
The company and its stock tend to thrive across all business cycle periods. It’s safe, continues to grow rapidly, and provides an ultra-dependable dividend for income investors in particular.
Apple (AAPL)
The news that Apple (NASDAQ:AAPL) stock is again flirting with a $3 trillion market capitalization should serve to give investors confidence.
Investor confidence is an area in which Apple currently lacks. According to a recent article by Barron’s, confidence in its shares is quite low based on analyst ratings. 61% of those analysts currently rate Apple as a buy. That is the lowest percentage since August of 2020.
The thrust of that article was that Apple shares can rise above their current market cap because of artificial intelligence. The company has been relatively quiet in relation to its plans related to AI. You can bet that the company is putting together a strategy for when it will announce those plans. When it does so, expect the markets to react positively.
The company has been maligned because of declining sales of late. However, Apple continues investing in growth while returning capital to shareholders. It is not the company to bet against.
Visa (V)
Visa (NYSE:V) and other credit card stocks have continuously defied throughout 2023. Cash-strapped American consumers have continued to rack up credit card debt nonetheless. If inflation and recession fears made the lives of Americans more difficult, you wouldn’t have known based on the results of companies like Visa.
Visa cardholders will continue to spend, especially in terms of cross-border payments. In 2023, cross-border volume increased by 20% overall. American consumers continue to satisfy their travel appetite. Beyond that, consumers continue to simply use credit cards more. Visa’s revenues increased by 11% in the most recent quarter, reaching $8.6 billion. As a result, net income increased as well. That translated to Strong per-share earnings growth in 2023 and in the most recent quarter. EPS grew by 21% and 17% during those periods, respectively.
American credit card debt has moved past $1 trillion. That’s a big threat to individual consumers but, in aggregate, will serve credit card companies well moving forward.
Salesforce (CRM)
Salesforce (NYSE:CRM) Is currently in a strong position due to multiple factors that are coming together in its favor. Most everyone knows that Salesforce is the largest customer relationship management firm and stock.
That’s particularly important at this moment in the business cycle. Investors expect the Federal Reserve to cut rates as early as March. That will drastically boost overall investment, particularly at the enterprise level. Businesses of all sizes will spend more on growth because lending will cheapen. Those enterprises will heavily invest in customer relationship management to foster growth. Salesforce is the largest CRM and, thus, is in a perfect position at the moment.
In fact, Salesforce is already doing very well. The company recently released its third-quarter results, which also suggests the reason for optimism. Revenues increased by 11% to $8.72 billion. Increasing economic confidence allowed the company to narrow its guidance for full-year growth to 11% as well.
Caterpillar (CAT)
When Caterpillar (NYSE:CAT) released earnings at the end of October, the markets did not receive the results well. It certainly wasn’t Caterpillar’s fault. In fact, the company did extraordinarily well, particularly regarding earnings per share. The company’s EPS of $5.52 was far above what Wall Street was expecting.
However, as mentioned, its shares didn’t improve in price by much. The reason was fairly simple: Investor clarity about the economy’s future was much more muddled then. It has since been clarified, and optimism is high. It looks very much like we have avoided a recession.
The Fed is going to cut rates in 2024, likely multiple times. That will catalyze spending and investment across multiple sectors, especially construction. In other words, Caterpillar is looking better and better.
The company has continued to do well despite the high interest environment. Demand for its vehicles has remained high. Despite higher prices, the company has realized higher volumes as well.
IBM (IBM)
IBM (NYSE:IBM) offers income and is well exposed to growth sectors overall. That’s a potent combination. IBM is entrenched in the artificial intelligence sector as well as the quantum computing industry. Investors are highly interested in both. Beyond that, IBM continues to offer a dividend that yields more than 4%.
All of those factors add up to create a stock that is very much worth investing in. Let’s start with the dividend. IBM last reduced its dividends in 1994 and continues to look secure. That dividend yields 4%, which is within the healthy range but also relatively high at the same time. Overall, IBM remains a stock to consider for investors seeking strong income sources.
At the same time, IBM is exposed to important growth sectors, including AI and quantum computing. That means equity offers investors a chance at real growth and provides a more stable income. IBM is well known for its Watson AI and is doing many things in that regard. The company is also entrenched in quantum computing, which promises to improve AI overall.
Cisco Systems (CSCO)
Cisco Systems (NASDAQ:CSCO) offers investors steady, reliable income and exposure to continued technology sector growth.
The company sells Internet Protocol networking equipment and services. That means it basically grows along with the overall increase in Internet connectivity. Based on current projections, the company’s top-line growth isn’t expected to be particularly impressive and doesn’t stick out. However, Cisco Systems is amongst the leaders in its business. The company will continue to grow with the secular increases in technology. For example, many firms invest heavily To improve their positions in data centers and AI.
That is reflected at Cisco Systems, which recently announced its strongest fiscal year Q1 results ever. The company’s revenues and profitability reached their highest levels ever.
Meanwhile, investors who purchase CSCO shares also receive a dividend that yields approximately 3.2%. That’s a nice incentive for a company that is very stable and serves to push returns much higher overall for investors.
On the date of publication, Alex Sirois 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.
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