With the Dow Jones Industrial Average powering past the 40,000 level for the first time, it certainly seems like the old basket of 30 companies is unstoppable. Undoubtedly, the Dow didn’t just surge past a historic milestone (time to put the Dow 40k caps on!); it’s also in a winning streak more than five weeks long. Indeed, hats off to the Dow Jones, an imperfect but still much-followed index that’s starting to heat up on the back of stronger market breadth.
The Dow has many stocks to thank for driving it to its record high, but the following three stocks have been mere “passengers” on the Dow’s impressive ride upward. With relatively weak performance and shares getting quite close to their 52-week lows, though, the following trio may be worth pursuing if you seek deeper value and the potential for a recovery in the second half.
Without further ado, consider the Dow stocks I’d buy should they look to inch back 52-week lows.
Boeing (BA)
It’s been another turbulent year for shares of Boeing (NYSE:BA), which have acted as a major drag on the Dow Jones, with shares now sitting down over 25% year to date. Shares ricocheted off 52-week lows back in late April but could easily be revisited given wild moves in the stock and the potential for uncertainties to keep piling up.
Undoubtedly, the design defects, whistleblowers’ concerns and other bad news have helped weigh down BA stock. With a new CEO likely in store for next year, questions linger as to whether Boeing can repair its reputation in addition to certain faults in select Boeing aircraft.
Indeed, the only thing that’s saving BA stock from falling to even greater multi-year depths (or even all-time lows) may lie in the market it’s operating in. Boeing is pretty much operating in a duopoly. And with a lack of serious competitors, any mistakes, hiccups and non-stop bad news seem more forgivable by investors.
Perhaps the biggest bull case is that there just aren’t many alternatives to go to if you need a new plane. With CEO David Calhoun to stay on the board once a new CEO is brought aboard, it will be interesting to see where the Dow stocks laggard goes from here. If it can get things right, there could be lots of room to ascend. In any case, I’d wait for a retest of 52-week lows before considering buying.
Nike (NKE)
Nike (NYSE:NKE) is another Dow component that has lost traction in recent years. Even with the Summer Olympics coming up (many are sure to wear Nike attire), the stock still seems stuck. Year to date, the Oregon-based sneaker and apparel company is down almost 14%. Moving into year’s end, though, I’d look for Nike to start pulling its weight, especially if the Dow is to continue its impressive run.
The company is serious about prioritizing innovation while cutting back on other aspects that may not help spark a run higher. Recently, the company slashed jobs at Converse in a realignment and cost-saving effort. Indeed, layoff news is never fun to hear. However, as CEO John Donahoe makes major changes across operations, it will be interesting to see how NKE stock reacts.
At 26.99 times trailing price-to-earnings (P/E), I think there’s room to sprint higher if Donahoe’s moves can bring back the growth. For now, the stock is ahead of its 52-week lows of $88 and change.
That said, with the recent slip off December’s peak and a recent quarter in the books that failed to impress, I’d not be surprised if negative momentum causes 52-week lows to be retested in the nearer term. Today, shares go for $92 and change. Should they fall back to 52-week lows, I may be enticed enough to step in.
Intel (INTC)
Intel (NASDAQ:INTC) has been quite a Dow stocks laggard, with INTC stock now sitting down more than 32% year to date. Fortunately for the Dow, Intel comprises a very small part of the average, given its low share price of $32.10 in writing. As a price-weighed index, the low-share-price stocks have a smaller weighting, so their moves have less impact. At writing, Intel is actually the smallest contributor to the Dow.
Either way, INTC stock has been punishing investors who’ve held, even in the face of red-hot demand for all things semiconductor-related. Every steep downward move makes it harder to stay confident in Intel’s multi-year turnaround plans. That said, with the stock fresh off hitting 52-week lows just over a month ago, perhaps Intel’s longer-term AI prospects are being discounted.
CEO Pat Gelsinger reportedly bought INTC stock as it approached its low for the year. I think that’s a good sign that the bearishness is way overdone. Whenever you have the boss buying, you may have a solid value play on your hands.
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.
