After representing the U.S. stock market for more than a century, the Dow Jones industrial average isn't going away. Perhaps it should. Despite the occasional injection of new blood (Cisco Systems and Travelers replaced General Motors and Citigroup, respectively, this year), the 30 Dow stocks still contain too many remnants from a bygone industrialized economy.
Still, its member companies are influential and widely held. In this slide show, you'll find our take on the 16 we think are worth buying (Prices are as of September 24. Click on the stock symbols for updated prices). Navigation begins to the right.
3M
Symbol: MMM
Price (as of September 24): $74.10
Our Rating: BUY
The time to buy 3M was back in March, when the stock traded for a ridiculous $41 -- ridiculous because 3M is one of the most dependable U.S. manufacturing businesses ever, and buying it for ten times estimated 2009 earnings was a slam-dunk. Although 3M reported a 16% decline in second-quarter earnings, it raised its forecast for 2009. Now the stock is merely a good long-term buy.
Sponsored Content
ALCOA
Symbol: AA
Price: $13.51
Our Rating: BUY
Shares of the aluminum producer are just where you want them to be when buying into a highly cyclical business -- off 71% from their peak and close to rock bottom. But patience is required. Gains will come as the economy recovers. Analysts expect a $1.01-a-share loss this year before black ink arrives in 2010.
Sponsored Content
AT&T
Symbol: T
Price: $27.03
Our Rating: BUY
Thanks in part to its exclusive iPhone deal, AT&T's wireless business is doing well, even as the wired-phone business continues its inevitable decline. Although we worry about cutthroat competition and the threat of tougher government regulation, the $1.64 dividend looks safe and very attractive. The stock yields 6.3%.
Sponsored Content
CHEVRON
Symbol: CVX
Price: $70.71
Our Rating: BUY
The California-based oil company offers financial strength, a generous, $2.72 dividend (resulting in a 3.9% yield at the current price) and a number of promising oil-and-gas exploration projects around the globe that have recently come on line, or soon will. Chevron shares are more closely tied to oil-price movements than those of ExxonMobil, but they're also cheaper.
Sponsored Content
COCA-COLA
Symbol: KO
Price: $52.34
Our Rating: BUY
Consumers may be struggling, but people the world over can still scrounge some change for a Coke and other soft drinks peddled by Coca-Cola. Its second-quarter results showed that volumes (basically bottles sold) rose 4%. But the big news was that volume soared 33% in India and climbed 14% in China. Earnings should rise modestly this year, more impressively next.
Sponsored Content
WALT DISNEY
Symbol: DIS
Price: $27.97
Our Rating: BUY
Theme-park revenues dropped 9% in Disney's third fiscal quarter, but parking yourself on the couch and watching sports is a recession-proof pastime. With ESPN channels booming (more than 70% of Disney's operating profits come from its media networks), the company is weathering the recession just fine. The price-earnings ratio of 15, based on estimated year-ahead profits, is well below historical levels.
Sponsored Content
EXXONMOBIL
Symbol: XOM
Price: $68.93
Our Rating: BUY
Whether oil prices are rising or falling, the well-managed, Texas-based oil giant is one of the safest ways to invest in energy. It has the size and skill to remain at the front of the pack. Its share-buyback program may be running out of steam. But the $1.68 dividend, which results in a 2.4% yield at the current share price, is safe and is raised regularly.
Sponsored Content
HEWLETT-PACKARD
Symbol: HPQ
Price: $46.87
Our Rating: BUY
A weak job market and a steep decline in business spending have wounded the PC and printer maker. Fortunately, chief executive Mark Hurd is one of the best cost-cutters in the business. Last year's acquisition of EDS will boost HP's profile in information-technology services, which tend to be more stable than hardware.
Sponsored Content
INTERNATIONAL BUSINESS MACHINES
Symbol: IBM
Price: $120.94
Our Rating: BUY
Any technology company that's been around since 1911 is doing something right. IBM, building on its powerful brand and strong customer relationships, has shifted its focus in recent years from hardware to software and services, which produce annuity-like revenue streams and carry higher profit margins. Abundant free cash flow allows Big Blue to boost dividends and shrink the share count each year.
Sponsored Content
JOHNSON & JOHNSON
Symbol: JNJ
Price: $60.72
Our Rating: BUY
Venerable J&J resembles a diversified health-care mutual fund, with its strong positions in prescription drugs, medical devices, over-the-counter medications and other consumer products. With half of revenues coming from abroad, J&J is also geographically balanced. J&J, one of only six nonfinancial firms with a triple-A bond rating, generates copious amounts of cash and yields 3.3%.
Sponsored Content
JPMORGAN CHASE
Symbol: JPM
Price: $44.37
Our Rating: BUY
JPMorgan suffered some scratches during the financial crisis but, unlike most other money-center banks, emerged largely unscathed under the leadership of CEO Jamie Dimon. The easy money has been made in the stock, which has surged 181% since March. But the bank is well-capitalized and will continue to pick up market share in lending and investment banking.
Sponsored Content
MCDONALD'S
Symbol: MCD
Price: $56.12
Our Rating: BUY
Good news: Sales at stores open at least a year rose 4.8% in the second quarter from the year-earlier period. Plus, McCafe coffee drinks continue to scald Starbucks, and consumers are trading down to Mickey D's bargain prices. Bad news: Earnings were nicked 9 cents a share because of a stronger dollar. Good news wins. Profits could climb 10% next year.
Sponsored Content
MICROSOFT
Symbol: MSFT
Price: $25.94
Our Rating: BUY
For the fiscal year that ended in June, Microsoft reported declining revenues for the first time in its history. It's too early to say whether the search alliance with Yahoo will yield results in the fierce competition with Google. But the upcoming launch of Windows 7, Office 2010 and new server software should help energize sales and profits.
Sponsored Content
PFIZER
Symbol: PFE
Price: $16.44
Our Rating: BUY
Revenue growth has been anemic for years, and Pfizer faces the expiration in 2011 of its U.S. patent on Lipitor, which accounts for a quarter of sales and profits. That expiration is concentrating the mind: Pfizer has 100 drugs in the research pipeline and is spending $68 billion to buy Wyeth. And the stock, which yields 4% and trades at eight times earnings, is cheap.
Sponsored Content
UNITED TECHNOLOGIES
Symbol: UTX
Price: $62.34
Our Rating: BUY
The Hartford, Conn., conglomerate makes everything from elevators to helicopters. Two steady sources of business -- military orders and ongoing maintenance work -- keep profits stable during tough times. We like its diversified businesses, $58-billion backlog of orders, 2.5% dividend yield and reasonable share price.
Sponsored Content
WAL-MART
Symbol: WMT
Price: $50.70
Our Rating: BUY
The world's largest retailer hasn't missed a beat during the recession -- in fact, its low, low prices have made it a prime beneficiary of consumers' newfound frugality. The lion's share of Wal-Mart's growth will come from abroad. Analysts look for earnings to rise 4% this year and 9% the next.
Sponsored Content
-
Elements of a Financial Snapshot for High-Net-Worth IndividualsDiscover how to assess and optimize your finances with the elements of a high-net-worth financial snapshot.
-
Why Digitizing Your Tax Records Can Simplify Your Filing in 2025Tax Records If you can, switching from paper to e-filing your taxes can have many benefits.
-
Stock Market Today: Stocks Jump Ahead of Trump InaugurationThe Dow and S&P 500 scored their biggest weekly gains since the early November election.
-
Stock Market Today: Stocks Pause After a Big RallyThe Nasdaq continues to lag the S&P 500 and the Dow so far in 2025.
-
Stock Market Today: Dow Pops 703 Points on Cooler InflationA benign reading from the Consumer Price Index report assuaged market fears about the path of borrowing costs.
-
Stock Market Today: Stocks Are Mixed Ahead of CPICool wholesale inflation numbers provide only slight relief before Wednesday's release of December Consumer Price Index data.
-
Stock Market Today: Dow Leads as UnitedHealth Stock PopsUnitedHealth was the best Dow Jones stock Monday on reports that Medicare Advantage payments could rise in 2026.
-
Stock Market Today: Dow Slides 697 Points on Super-Hot Jobs DataWhen the December nonfarm payrolls report hit the tape, there was no question which way stocks would go at Friday's opening bell.
-
Blowout December Jobs Report Puts Rate Cuts on Ice: What the Experts Are SayingJobs Report The strongest surge in hiring since March keeps the Fed on hold for now.
-
The Cheapest Places To Retire in the USWhen you're trying to balance a fixed income with an enjoyable retirement, cost of living is a crucial factor to consider.
