The Dow Jones Industrial Average recently made new all-time highs, reaching a peak of 39,889. This has set off great excitement, with 40,000 seeming imminent and the possibility of Dow 50,000 starting to take shape.
However, the Dow is unlikely to climb to these greater heights in a straight line. The market is arguably overbought now after a huge rally this past year. Meanwhile, doubts are mounting around whether or not the Federal Reserve will deliver on the rate cuts that market participants are expecting. Geopolitical tensions are also thick right now.
This suggests that a correction could be in the offing. And that’d mark a great opportunity. If and when the indexes do pull back, it will time to buy these seven great Dow stocks into any weakness.
Honeywell (HON)
Honeywell (NASDAQ:HON) is a leading American industrial company. The company has a storied history and has been involved in the creation and commercialization of a number of groundbreaking technologies such as biodegradable detergents, aircraft autopilot, and barcodes.
Today, Honeywell has the following operating businesses: building technologies, performance materials and technologies, safety and productivity solutions, and aerospace. This diversification ensures that Honeywell’s operations can keep on rolling in a variety of economic conditions.
Honeywell also continues with its commitment to innovation. Right now, it’s hottest technology is arguably in quantum computing. Honeywell developed quantum computing advances and rolled that intellectual property into a separate company, Quantinuum, in which Honeywell remains a major investor and partner.
In January, Quantinuum raised $300 million at a favorable $5 billion valuation. This establishes the company as having a strong balance sheet and with the firepower to be a leader in the emerging quantum computing space. More broadly, Honeywell’s combination of highly profitable core businesses and moonshot investments should continue to serve its shareholders well.
Intel (INTC)
Intel (NASDAQ:INTC) has been a roller coaster over the past year. The stock shot up in 2023 amid a revival in the domestic American semiconductor manufacturing space.
The Biden Administration’s CHIPs Act pledged a great deal of monetary support to companies — including Intel — that are investing heavily in new semiconductor factories. Specifically, Intel is reportedly in line to receive about $20 billion in a combination of loans and grants to assist its American manufacturing push.
With Intel’s robust R&D capabilities and growing foundry business, Intel has put the pieces in place for a comeback. However, Intel has gotten off on the wrong foot in 2024, with shares dipping significantly even as tech stocks and chip companies have been soaring.
Some of that has been due to continued weakness in the PC market, where Intel earns a large portion of its profits. And more recently, Intel shares slipped further on reports that the Chinese government intends to phase out the purchase of Intel chips for its government computers.
While the short-term news flow has been negative, investors can take advantage of the pullback. Intel’s longer-term prospects still appear bright, particularly thanks to the focus on building up America’s semiconductor industry.
Chevron (CVX)
Chevron (NYSE:CVX) is one of the world’s leading energy companies. For decades, Chevron has developed a reputation for excellence in the oil and gas arena.
It has increasingly adopted new technologies in recent times. For example, in 2022, Chevron acquired the Renewable Energy Group for $3.15 billion, building its presence in renewable fuels and feedstocks.
One of its most important investments has been in liquefied natural gas (LNG). Chevron has put countless billions of dollars to work in places such as Angola to develop its world-class LNG reserves.
Particularly since the invasion of Ukraine, LNG has proven increasingly valuable as a substitute for Russian gas while helping to power the European continent. Chevron can be a large part of that solution.
More broadly, Chevron’s wide-ranging investments in different types of energy assets in nearly all geographies worldwide give it the tools to deliver shareholder value for decades to come, regardless of the exact contours of future energy usage.
Johnson & Johnson (JNJ)
Johnson & Johnson (NYSE:JNJ) was founded way back in 1886 to sell surgical dressings. Over the more than century to follow, Johnson & Johnson has created all sorts of leading medical devices and pharmaceutical drugs.
Many investors have long relied on Johnson & Johnson to be a bedrock piece of their portfolios. With more than 50 consecutive years of dividend increases and a world-class product portfolio, Johnson & Johnson has had the formula for dealing with all sorts of economic uncertainty.
That said, JNJ stock has underperformed in recent years. The company hasn’t meaningfully participated in the GLP-1 weight loss drug boom, while the medical devices side of the business was hampered by an industry slowdown related to the pandemic.
Longer-term investors can take advantage of the recent doldrums, as JNJ stock is now going for less than 15 times forward earnings. Particularly in light of the company’s sterling triple-A credit rating, that makes for a great defensive Dow stock to buy now.
Coca-Cola (KO)
One of the best investments of Warren Buffett’s storied career has been in Coca-Cola (NYSE:KO) stock. In 1988, Buffett purchased more than $1 billion of KO stock, which amounted to a more than 6% ownership position in the company.
Over the years, Buffett has held onto that stake for his holding company, Berkshire Hathaway (NYSE:BRK-A) (NYSE:BRK-B). Berkshire Hathaway is now Coca-Cola’s largest shareholder, with that position being worth more than $20 billion. That’s the power of long-term compounding right there.
Coca-Cola has been able to deliver such tremendous results because it is a wonderful business. Soda and sweet beverages are a high profit margin business that consumers enjoy on a regular basis. People aren’t too price sensitive to the cost of a drink, and indeed, Coca-Cola has been pushing through price increases to offset the recent inflationary wave. That speaks to the power of the brand.
KO stock has been roughly flat since the onset of the pandemic. That has come even as the company has grown its earnings and dividend considerably over that time period. These factors have combined to make Coca-Cola a solid purchase at 21 times forward earnings and with a 3.2% dividend yield today.
Nike (NKE)
Nike (NYSE:NKE) is in a tailspin. The worldwide apparel giant has seen its stock fall more than 20% over the past year. With its recent slump, shares have slipped to near 52-week-lows. With the market as a whole at fresh all-time highs, this makes for an interesting relative valuation opportunity in Nike shares.
Why has the stock slumped? The company’s recent earnings report missed the mark. Of particular note, Nike’s revenues slid 1% year-over-year, which is hardly a great figure, especially during a period of higher inflation. However, there has been particular weakness in the Asian market, and Nike should return to overall growth once international economies pick back up.
More broadly, there is growing competition in the apparel space. That’s a real headwind for Nike right now.
But the company’s unparalleled brand and marketing partnerships give Nike real sticking power. Nike’s heavy investments in direct-to-consumer shopping channels are another sustainable competitive edge for the company. All this suggests that NKE stock should get back in the game in the months to come.
Amgen (AMGN)
Amgen (NASDAQ:AMGN) is a leading biotech company. Its roots trace back to oncology treatments and products for kidney disease. More recently, Amgen has expanded into other areas such as a cholesterol-lowering drugs and a treatment for migraine headaches.
AMGN stock has slipped significantly over the past six weeks. The decline began with an earnings report that didn’t live up to the market’s expectations. Especially at a time when other drug companies have achieved blockbuster growth in fields such as GLP-1 products, Amgen’s pipeline might not seem quite as exciting.
But the company is playing the long game, building a steady portfolio of leading drugs and therapies. Analysts see Amgen’s revenues leaping 17% this year, which would lead the company to $33 billion in total annual sales. And analysts forecast steady mid-single digits earnings per share growth going forward as well. That makes AMGN stock a reasonable entry point today at 14 times forward earnings, and shares would get even more attractive on a further dip.
On the date of publication, Ian Bezek held a long position in NKE, JNJ, INTC, HON stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
