The Dow Jones Industrial Average has been bringing up the rear among the three main U.S. stock indices. While the benchmark S&P 500 and technology-laden Nasdaq indices are up 15.69% and 21% respectively in 2024, and at all-time highs, the blue-chip Dow is up a measly 2%. The underperformance is being blamed on a handful of the Dow’s 30 component stocks.
While many of the stocks included in the Dow Jones Industrial Average are outperforming the broader market this year, several are deep in the red. In fact, some of the worst performing stocks of the year can be found among the Dow 30, and that fact has been holding the index back compared to its peers. This has led to renewed calls for an overhaul of the nearly 140 year old index.
Here are three Dow stocks to sell in June before they crash and burn.
Nike (NKE)
Analysts at investment bank Morgan Stanley (NYSE:MS) just lowered their price target on Nike (NYSE:NKE) stock to $114 per share from $116 previously. The analysts warned that the company’s upcoming financial results and guidance could be below expectations when the company next reports earnings on June 27. The Morgan Stanley downgrade is the latest knock on the stock of the sneaker and sports apparel giant.
NKE stock has been a big disappointment in recent years. The share price today is 46% below the peak it reached in November 2021 during the end of the pandemic rally.
So far this year, the Dow component has dropped 11%, completely missing out on the current rally. Weighing on the share price have been slumping international sales, particularly in China, and rising competition from other popular sneaker makers such as Deckers Outdoor (NYSE:DECK).
The upcoming financial results from Nike could be a make or break moment for the stock. Investors may want to exercise caution and sell the shares now.
Salesforce (CRM)
Another stock that has been completely undone by its financial performance has been Salesforce (NYSE:CRM). The cloud-computing giant’s stock has cratered ever since the company issued disappointing first-quarter financial results.
CRM stock is now down 9.50% on the year, making it a Dow stock to sell. The share price has declined about 25% since peaking at the start of March this year, with no bottom in sight.
CRM stock went into freefall after Salesforce’s Q1 revenue missed Wall Street’s target for the first time since 2006. Executives blamed the miss on longer deal cycles and the implementation of a new go-to-market strategy.
However, Salesforce’s forward guidance also missed analysts’ forecasts, further hurting the stock. Management said that they expect deal compression and slowing projects in professional services to weigh on the company’s financial performance going forward. Time to sell.
UnitedHealth Group (UNH)
Dow stock UnitedHealth Group (NYSE:UNH) has been hurt by a crippling cyberattack at its subsidiary Change Healthcare and by poor sentiment towards healthcare stocks. Shares of the largest medical insurance company in the U.S. are down 11% this year and up only 2.48% over the last 12 months.
This after UnitedHealth disclosed in February that a cyberattack breached part of Change Healthcare’s information technology network.
The fallout from the cyberattack has been far reaching across the American healthcare sector, with doctors left without a way to fill prescriptions or get paid for their services. The company is still working to bring parts of its system back online. UnitedHealth has said that the cyberattack at Change Healthcare cost it 74 cents per share in its most recent earnings print, and that its full-year impact is likely to be between $1.15 and $1.35 a share. The cyberattack looks likely to weigh on UNH stock for the foreseeable future.
On the date of publication, Joel Baglole held a long position in DECK. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
