The month of March has a reputation for being among the more volatile ones for the stock market. The NCAA basketball tournament known as March Madness also occurs during the month. In turn, some associate that madness with tumult in the markets. That has investors curious about what will happen to Dow stocks this month.
Whether March is a volatile month or not remains up to interpretation. Over the past 33 years March has seen the S&P 500 climb in 21 of 33 of those years. That’s roughly the middle of the road compared with all other months.
As I write this March is almost two weeks old. The S&P 500 is near its starting price for the month, but has definitely shown some signs of volatility. Regardless, investors understand that it is time in the market that beats timing the market overall. Money invested in March is likely to produce long-term returns. With that in mind, let’s look at seven Dow darlings for investors to consider this month.
Merck (MRK)
Investors don’t need to look very far in order to understand why Merck (NYSE:MRK) Stock is generally well regarded on Wall Street. The company offers stability on multiple fronts: It sports a very low beta of 0.38 and provides dividend income yielding a respectable 2.5% to those investors who own shares. For stability and income it’s a relatively easy choice within the pharmaceutical sector.
However, the narrative supporting Merck as an investment goes beyond stability alone. Equally importantly, MRK stock offers investors legitimate chances to secure growth.
The best pharmaceutical stocks to invest in are often those that have the power of blockbuster drugs on their side. Merck is certainly fits that bill due to its blockbuster drug, Keytruda. The cancer drug accounted for $25 billion in sales in 2023, an increase of 19%. Sales growth was slightly faster during the fourth quarter, at 21%. The company is seeing an increase in sales for earlier indications for the drug. That suggests that its sales trajectory will only continue to point upward. It is that combination of continued growth potential and stability mentioned earlier that makes MRK stock one to buy.
Amazon (AMZN)
Amazon (NASDAQ:AMZN) stock hasn’t received as much attention as many of the Silicon Valley tech companies of late. That’s a good reason to take another look at the eCommerce and cloud titan currently.
A quick note: Amazon very recently joined the Dow, replacing Walgreens Boots Alliance (NASDAQ:WBA). It’s the first time that the composition of the Dow has changed since 2020. The inclusion of Amazon in the highly respected index should serve it well.
That is not the only good news for the company. Deutsche Bank (NYSE:DB) recently upgraded its price target for AMZN stock to $210. The bank is particularly optimistic about Amazon’s strong opportunity across advertising channels. Prime video and connected TV advertising is forecast to continue growing rapidly.The high margin business is expected to contribute to positive operational growth moving forward and obvious strength.
None of this even mentions AWS. The combination of AI and cloud computing is a massive continued opportunity and Amazon is amongst the largest cloud firms globally. that gives the company another healthy, viable avenue for continued growth.
Microsoft (MSFT)
Microsoft (NASDAQ:MSFT) is entering a different phase in 2024 in which its stock will face greater scrutiny. Questions around its AI prowess continue to mount and the voices raising concern continue to grow louder. Headlines continue to question the value of its AI subscriptions which is but one problem the firm is facing. More recently, Microsoft is facing issues regarding the alleged violent and sexual content of its AI image generation.
There is a clear contrarian opportunity within all the chaos. That opportunity lies within the application of CoPilot to finance. Microsoft introduced that product in late January and it continues to have substantial potential. The world of finance is highly numbers oriented and continues to rely on spreadsheets such as excel. It has always been my personal belief that the lowest hanging fruit and greatest opportunity for AI is in increasing efficiency in that regard.
AI can simply supercharge spreadsheet calculations which in turn should make the finance sector more efficient given the ubiquity of excel.
McDonald’s (MCD)
At first glance, McDonald’s (NYSE:MCD) might not appear to be the best of Dow stocks at the moment. Fourth-quarter revenue was lower than what then Wall Street had anticipated. The company blames inflation and boycotts in the Middle East as being partly responsible for the earnings miss.
I tend to agree with that assessment: Comparable sales increased in all markets except for the Middle East where multiple wars continue to rage. Pundits will continue to question why McDonald’s would offer free meals to Israeli soldiers in the first place. The move was fraught with strong potential ramifications from the beginning and lacked neutrality and seems tone deaf overall. It was a misstep and if McDonald’s executives wonder why the boycott happened they should simply look in the mirror.
However, McDonald’s will move past it and continue toward growth in the future. The company is entering its fastest period of historical growth ever. The company plans to grow its restaurant count to 50,000 by 2027. It’s also taking aim at higher margin products including drinks and snacks. If the company can successfully scale its CosMc’s restaurants it could usher in considerable growth.
Salesforce (CRM)
Salesforce (NYSE:CRM) continues to be one of the more difficult to understand stocks in relation to the AI opportunity. The leading customer relationship management software firm is also entering a new era in which it will pay dividends. Those who own shares by March 14th will be able to receive a $0.40 dividend payable on April 11.
So, it’s clear that Salesforce is marketing toward stability as much as growth at the moment. A substantial part of that growth opportunity is predicated on artificial intelligence. The issue there is that AI is not yet predicted to produce substantial sales increases for Salesforce. The company recently announced its 2025 guidance which included single digit top line growth. That rate was lower than many expected and reflected lower-than-expected AI returns.
The good news is that earnings were better than Wall Street had been anticipating. Further, Salesforce is bringing its products to Amazon’s cloud as we speak. Those two factors suggest that Salesforce has all the potential to continue moving upward this year.
Nike (NKE)
Nike (NYSE:NKE) could easily be considered a dog of the Dow at the moment. The company has all kinds of problems which are reflected negatively in its stock price.
The biggest problem is simply that the company’s second-quarter outlook recently weakened. Nike slashed its revenue growth estimate from 10% all the way down to 1% for the period. That’s a trend that is broadly sweeping the retail apparel sector so Nike is not unique in that regard.
Meanwhile, the company is drastically slashing expenses. The company announced earlier in the year that it would trim spending by $2 billion in the next 3 years. Historically, Nike tends to do very well at the bottom line. Those spending cuts should contribute to the continued strength in earnings moving forward which is one reason to consider Nike.
Another is that Nike is showing some signs of strength across digital channels. Sales growth there is outpacing the weak forecast. That suggests that Nike can invest strategically in that area and perhaps sees new growth.
IBM (IBM)
IBM (NYSE:IBM) stock continues to improve as the company continues to shed its reputation as a legacy firm. The company has established a strong footing in the artificial intelligence sector. That has rejuvenated it, sending it to highs it has not experienced in more than a decade.
The company continues to make a name for itself through machine learning and AI platforms such as the well-known Watson. IBM has received a lot of attention for the AI platform and that has allowed it to grow. IBM’s book of business is strong which is very suggestive of how other firms feel about the resurgent company: They believe the firm has a strong understanding of AI backed by a long history of use cases.
Yes, IBM shares are priced high at the moment. Yet, if 2023 showed us anything it was that price projections for AI stocks were essentially meaningless.
In other words, IBM has potential to move from strength to strength in 2024. none of that even mentions the quantum computing opportunity. That’s another area where IBM stands out and benefits from future potential growth.
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.
