On Jan. 22, the Dow Jones Industrial Average finished the day above 38,000 for the first time in history. The strong performance of the index and historical highs suggest that 2024 will be very strong.
It also leads investors to wonder which stocks among the 30 listed on the Dow are worth buying and which are worth selling.
Generally, the U.S. stock market should be robust in 2024. The Dow Jones represents 30 prominent companies listed on U.S. stock exchanges. Thus, record levels imply overall strength in the U.S. economy. Let’s look at seven Dow stocks and where they’re headed soon.
Microsoft (NASDAQ:MSFT) recently made news as the stock’s market capitalization surpassed $3 trillion. Such a high valuation raises the question of whether Microsoft can rise further.
Investors will be unsurprised to hear the reason: Artificial intelligence. Hear me out, though. Microsoft continues to have a lot of opportunities related to AI. The primary opportunity is that of monetization.
It’s fair to argue that the difference between Nvidia (NASDAQ:NVDA) and Microsoft, as it relates to AI and valuation, is monetization. Microsoft’s current P/E ratio is just below 40 times. Meanwhile, Nvidia’s P/E ratio is above 81 times.
Nvidia commands a higher premium due to the monetization of AI. Thus, the more Microsoft can monetize AI, the higher its shares can rise. Of course, Microsoft has done so with its monetization of CoPilot. However, that hasn’t been nearly as successful as Nvidia’s monetization through chip sales, which remain in high demand for AI applications.
It’s an opportunity for Microsoft, arguably making it a buy at the moment despite recently surpassing a $3 trillion valuation.
It’s a bad idea to bet against McDonald’s (NYSE:MCD) stock right now. The Golden Arches are operating very well at the moment and are also seeking real, substantial growth.
Investors considering McDonald’s a boring, slow-growth firm should think again. In December, the company announced that It plans to increase its footprint to 50,000 restaurants by 2027. That will be its fastest period of growth in history.
Meanwhile, it’s also evident that McDonald’s is attempting to win back market share from competitors—namely, Starbucks (NASDAQ:SBUX). The company continues to test its CosMc’s restaurant concept. Long wait times suggest that the restaurant concept has the potential to rest market share from Starbucks with its expansive drinks menu.
All of that positive news follows a Q3 earnings report, which showed an 11% increase in global system-wide sales. It is little wonder that some analysts expect 2024 will be very strong for McDonald’s, which has caused them to up their ratings.
There is little reason to believe that Salesforce (NYSE:CRM) stock should rise soon. Salesforce is in something of a dead zone despite its strong performance of late.
In the third quarter, Salesforce provided better-than-expected results, including revenues that increased by 11% to $8.7 billion. The better-than-expected performance provided the company the confidence to raise guidance for multiple metrics. That’s all on top of a year that saw Salesforce shares amongst the best performers on the Dow Jones Index.
The problem is Salesforce’s revenues are expected to grow by 10% in Q4. That’s not a strong enough catalyst to propel CRM shares higher. Instead, investors should look forward to rate cuts expected to begin in June per most consensus opinions.
Lower lending rates should Galvanize greater investment in customer relationship management overall. Salesforce continues to heavily tout its AI investment in that regard. Furthermore, it’s also the dominant force in the space. However, investors are going to have to wait a few months for that catalyst to kick in.
Procter & Gamble (PG)
As long as consumers are willing to absorb higher prices, there’s no reason to bet against Procter & Gamble’s (NYSE:PG) stock.
That’s the message that the market sent upon P&G’s Jan. 23 earnings release. Sales grew by a modest 3% during the most recent quarter, but that didn’t matter despite being a slight miss. What did matter is that Procter & Gamble continues to be able to pass higher prices on to consumers, leading to improved net income.
P&G now expects that net income growth will range between 8 and 9%. It had expected the range to be between 6% and 9% prior. Consumers continue to absorb price increases for their favorite fast-moving goods brands.
That was the primary takeaway of the stock market on Jan. 23. Shares jumped from $147 to $155 on the earnings release and the news contained therein. Procter & Gamble will continue to rise because consumers remain undeterred.
Resilient consumers are also the primary positive factor for Visa (NYSE:V). Its stock is rising after releasing earnings that showed better than anticipated results. The reason: strong consumer credit spending.
2023 was the year of strong consumerism fueled by credit spending. 2024 is shaping up to be no different. Visa saw its revenues increase by 9% in the first quarter on especially strong cross-border payment volume. American consumers continue to travel in record numbers following the pandemic.
It’s also clear that if a recession is avoided entirely, consumer credit spending plays a large part in the result. Further, net income increased by 17% during the period.
While many companies are looking for ways to find greater efficiency at the moment, Visa has no such problem. Its bottom line results reflect that truth. Again, there’s no reason to bet against Visa, given consumer credit usage over the past year.
Early expectations suggest that the Vision Pro will be another success for Apple (NASDAQ:AAPL). However, it’s unlikely that the Vision Pro will do much to send AAPL stock higher in the near term.
Further, despite strong early pre-release sales, it’s also likely that Vision Pro demand will be limited. Current demand data based on pre-release sales suggest that early enthusiasm is limited to developers and power users.
The Vision Pro was never expected to be a vital contributor to Apple’s top line at any rate. Apple analysts expect the company to easily sell more than 500,000 headsets, priced at $3,500 apiece. That’s not much for a company of Apple’s stature.
iPhone sales continue to be Apple’s bread and butter. Fortunately for Apple investors, there is good news. The iPhone is now the most popular brand in China. That’s particularly good news: Apple had courted other populous Asian nations as China’s economy struggled during 2023.
It’s part of a larger wave of consolidation in the energy sector. It’s also one that has drawn the attention of antitrust investigators. While there is no clear indication of the potential outcome, one thing should be noted.
Large energy firms had a banner year in 2022 after a long dry spell. 2023 was a problematic year again. 2024 is offering signs that are both positive and negative. Demand could remain weak, however, simultaneously, so your political tensions remain high, and crude oil prices have risen lately.
All things considered, it’s fair to argue that Chevron is subject to many factors that could lower its prices. Chevron’s merger with Hess could just as easily go through, and oil prices could rise, ushering in an era of renewed strength. However, the energy sector faces long-term threats worth considering.
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.