The Dow Jones Industrial Average is full of proven blue-chip stocks, many of which can help build an impressive, high-quality portfolio. That said, the price-weighed nature of the index is just weird and perhaps too arbitrary to make it a widely-followed representation of how the broader market is doing.
Undoubtedly, the S&P 500 is the better index to watch if you want to take the broader stock market’s temperature. However, there’s no denying that the Dow’s basket of 30 stocks is also fun to keep tabs on. It’s a historic index and a small enough sample size for new investors to examine.
In this piece, we’ll look at three relative laggards (Dow stock duds) that are ripe for profit-taking this month. So, if you’re looking to sell in May to go away, it makes sense to start with these Dow stocks to sell.
Intel (INTC)
It’s painful to watch the latest downfall of Intel (NASDAQ:INTC), with shares plunging around 40% off its late-December high. Undoubtedly, the costs are adding up as the firm stumbles on its way to catching up with semiconductor rivals in the AI age. Though AI, particularly the rise of AI PCs, may represent the means to help Intel find its way back, investors seem to be losing confidence and fast, following the latest quarterly results.
The latest quarter wasn’t awful by any means. But it did come in lukewarm (sales fell short of expectations), and it was probably the softer guidance that hit INTC stock the hardest. The company is betting big on foundries to power some comeback. With a whopping $2.5 billion in losses coming from the foundry unit, perhaps investors are right to be just a bit concerned as the balance sheet takes on the subtle jab.
Though INTC stock could face massive upside potential if it can deliver on its transformative plans, I’m inclined to sit on the sidelines after its latest rough showing.
Boeing (BA)
Boeing (NYSE:BA) stock has been on the descent since reaching peak 52-week altitude in mid-December 2023. Since then, shares are down around 32%. And though there’s a near-10% bounce to get excited about a comeback, I’d view the ricochet as more of an opportunity to take some stake off the table than a sign it’s time to chase it higher.
With the recent passing of a Boeing supplier whistleblower, questions linger as to how deep the quality troubles cut. Undoubtedly, there’s a great deal of uncertainty surrounding the matter. Add the haze of uncertainty over who will replace outgoing CEO David Calhoun in the equation, and there are just too many unanswered questions to justify buying a big stake in the Dow component right now.
Though markets are upbeat over Boeing’s $10 billion debt sale, I can’t say I share the enthusiasm. At least not at this juncture, while BA stock is just shy of $180 per share.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) is a sugary soda firm that hasn’t been going anywhere in a hurry. The stock is just over 3% higher than its 2020 peak, a pretty meager showing over the past four years for a brand and stock that Warren Buffett holds in such high regard.
Though KO stock has been riding higher in recent weeks, now up around 7% since mid-April, thanks in part to a solid quarter and a raised revenue outlook, I can’t say I’m willing to pay almost 25 times trailing price-to-earnings for a beverage company that may see obesity drugs weighing on its growth over the next few years.
Undoubtedly, obesity drugs have likely already made some mark. But as they get better and perhaps more widely available, it will get tougher for Coke to grow over the longer term. The latest guidance hike is mostly attributed to price hikes. Once the inflationary storm ends, Coke will need to innovate and invest in operating efficiencies to keep earnings going strong, all in the face of obesity drug headwinds.
On the date of publication, Joey Frenette did not hold (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.
