I’ll be the first to acknowledge that there’s some cache to being a Dow stock. But that doesn’t mean investors should be obligated to buy. When the market turns, sometimes those names become Dow stocks to sell – and that’s where we are today.
Of course, it first pays to know exactly what a Dow stock is. A Dow stock is one of the 30 names that make up the Dow Jones Industrial Average – the index of 30 large, publicly owned blue-chip companies that trade on either the New York Stock Exchange or the Nasdaq composite.
Being a member of the Dow is a big deal. Dow stocks are considered to be the most highly capitalized and influential companies on the market. It serves not only as a representation of the larger stock market but it’s also seen as an economic bellwether.
The market is having a rough 2022, and so are several names on the Dow Jones Industrial Average. These seven names are among the worst on the Dow, and all of them have a poor rating in my Portfolio Grader.
|DIS||Walt Disney Co.||$97.16|
I’ve made no secret that I’m not a fan right now of Intel (NASDAQ:INTC) stock. Once the acknowledged chip leader, INTC has lost enough market share that it ceded its No. 1 position.
Meanwhile, Intel CEO warned that the personal chip market will likely drop even more than the 10% that experts anticipated.
Intel is hoping to raise $3.5 billion by taking its self-driving technology unit, Mobileye, public in an initial public offering, but this year has been a disappointing year for IPOs. The company may have to settle for $2.5 billion – or perhaps even less.
Earnings in the second quarter included earnings of $15.32 billion versus the Street’s expectations of $17.92 billion. EPS of 29 cents per share was worse than expectations of 70 cents EPS.
Intel has an “F” grade in the Portfolio Grader.
Down nearly 38% so far this year, things appear to just be getting worse for Boeing (NYSE:BA). The Federal Aviation Administration disclosed that the aircraft maker doesn’t anticipate winning approval for its 737 Max 10 before next summer. The disclosure raised new concerns about Boeing’s timeline for deliveries.
The FAA is also questioning Boeing about its safety certification requirements for the Max 10, saying in a Sept. 19 letter that the company has not yet completed its required assessments.
Congress mandated new cockpit alerting requirements for aircraft in 2020, following crashes of two Max 8 airliners that killed a total of 346 people. After a rough stretch with the Max 8, Boeing badly needs to have a clean safety record with the Max 10 and for the FAA to approve sales.
Boeing has missed earnings for the last several quarters. In the most recent report, Q2 revenue of $16.68 billion was less than the $17.53 billion that analysts expected. An EPS loss of 37 cents per share was worse than the loss of 11 cents per share the Street predicted.
BA stock has a “D” rating in the Portfolio Grader.
JPMorgan Chase (JPM)
Big bank stocks don’t get bigger than JPMorgan Chase (NYSE:JPM), but it was a difficult second quarter for JPM stock.
The bank reported earnings that missed on top and bottom lines, with revenue of $30.72 billion and EPS of $2.76 worse than analysts’ estimates of $31.82 billion and EPS of $2.90. On top of that JPM suspended share repurchases so it could build up its capital in preparation of higher regulatory requirements in 2023 and 2024.
JPMorgan is among the bank stocks reporting earnings next week, and there’s a school of thought that things are going to be much improved. Higher interest rates mean that JPM should have been able to make more money on its loan products. So not surprisingly, JPM stock jumped by 6% in early October.
However, it’s also reasonable to expect that the market has already priced in a positive earnings report for JPM, meaning that there’s little further room to go should the bank manage to at least beat expectations.
JPM has a “D” rating in the Portfolio Grader.
The maker of protective helmets, Post-It notes and other commonly used products, 3M (NYSE:MMM) has had a difficult year. Down almost 40% so far in 2022, 3M is facing a difficult short-term future as a slowing economy will likely weigh down the industrial sector.
On top of that, the company is expected to pay several billion dollars in connection to liabilities from defective earplugs that were sold to the U.S. military.
Put those two together and MMM’s quarterly earnings report looks to be a trouble spot. In the second quarter, 3M barely beat analysts’ expectations, topping revenue by less than 0.1% ($8.7 billion) and EPS by only 4 cents per share ($2.48).
MMM stock has a “D” rating in the Portfolio Grader.
Retailers like Nike (NYSE:NKE) are having some serious problems during this economy. Inflation at its highest rate in a generation means that people have less money for discretionary purchases, like high-priced athletic shoes and clothing.
NKE stock is down 47% so far this year, much worse than other Dow stocks and the greater stock market. The Wall Street Journal reported that the company’s inventories are up 44% to $9.7 billion, and profit margins are down thanks to greater freight costs.
On the plus side, earnings for the company’s fiscal first quarter 2023 were slightly better than expected. Revenue of $12.69 billion topped expectations of $12.3 billion, and EPS of 93 cents was a penny better than anticipated. But the headwinds facing NKE aren’t going away soon.
NKE stock has a “D” rating in the Portfolio Grader.
Salesforce (NYSE:CRM), the maker of cloud-based software, is down nearly 42% on the year and a little more than 47% since November 2021.
Much of the blame comes from the current economic environment. Rising interest rates and a strong U.S. dollar is creating some pain for CRM investors. Salesforce says that its revenue growth is expected to slow to 17% this year – the first time that CRM would see revenue growth of less than 20% for a year.
Earnings for the fiscal Q1 2023 were better than expected. It had revenue of $7.72 billion topped analysts’ expectations of $7.7 billion, and EPS of $1.19 better than the Street’s expectations of $1.03. But with slower revenue growth expected, CRM stock loses quite a bit of appeal.
CRM stock has a “D” rating in the Portfolio Grader.
Walt Disney Co. (DIS)
All is not well with the House of Mouse. Walt Disney Co. (NYSE:DIS) is one of the world’s best-known entertainment companies, with its signature amusement parks, cruise line, movie studio and now its Disney Plus streaming service.
But Disney is struggling with growing pains. CEO Bob Chapek’s reign has been far from smooth and the former CEO, Bob Iger, has criticized naming his successor as one of his “worst business decisions.”
Employees are also in an uproar from the company’s response to Florida’s new law that limits instruction on gender identity and sexuality (the so-called “Don’t Say Gay” law). Disney also lost its special tax district in Florida after feuding with Gov. Ron DeSantis.
While the company scored beats on both the top and bottom lines in the third quarter, DIS stock is down 35% so far this year. It gets a “D” rating in the Portfolio Grader.
On the date of publication, Louis Navellier has a position in BA, JPM, NKE and DIS. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
On the date of publication, the InvestorPlace Research staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.