The Dow Jones Industrials (^DJI -0.11%) have finished the first half of the year with solid performance, setting new all-time record highs on more than 20 occasions during the first six months of 2017, and posting an overall gain of almost 1,600 points, or about 8%. Yet the best-performing stocks in the Dow have seen total returns of 25% or more, and they have solid prospects that could carry them even higher in the remainder of the year and beyond. Boeing (BA -2.87%), McDonald's (MCD -0.05%), and Apple (AAPL 1.27%) have seen better returns than their Dow peers, and shareholders are excited about their futures.
BA Total Return Price data by YCharts.
Boeing is flying high
With gains of nearly 30% including dividends, Boeing takes the crown as the best Dow stock of 2017 so far. The aerospace industry remains in full-growth mode, and Boeing has taken at least its fair share of new business.
Near the end of June, the Paris Air Show provided a venue for Boeing to exhibit its latest products, and the result was more than 570 orders for new aircraft. The 737 MAX 10 showed well as the most recent model in the popular 737 line for Boeing, and more than 500 orders for 737s overall once again demonstrated the value that airlines and other customers put on the narrow-body jet. Larger models, like the 787 Dreamliner and the 777X, also continue to show promise for Boeing.
Image source: Boeing.
Boeing is also a defense contractor, and the military side of the business has also shown signs of picking up lately. Because of the Trump administration's promise to restore defense budgets and build up the military, Boeing hopes to play a key role in supporting those efforts.
Relations between Boeing and the president haven't been entirely positive, with criticism of the cost of Air Force One putting some tension between the two parties. Overall, though, Boeing sees strength going forward, both commercially and in the defense segment, and that could promote further gains for the stock throughout the rest of the year.
McDonald's shareholders are loving it
McDonald's has bounced back convincingly from a multiyear period of tough conditions from 2012 to 2015. Building on gains from last year, McDonald's has once again kept up its momentum by returning to its roots and delivering value to its customers. The key decision McDonald's made to provide all-day breakfast items to its customers has paid off with renewed loyalty and added sales, and the fast-food chain has found that, rather than being an alternative to lunch and dinner options, breakfast items become add-ons to later meals, and drive incremental sales gains.
The boost to performance has shown up in McDonald's financial results. In the first quarter, refranchising efforts led to a slight drop in total revenue, but comparable-restaurant sales were up 4% on a global basis. Earnings per share were up by nearly a fifth, sending the stock to all-time record highs.
New quality-enhancing initiatives, like using more fresh beef, allowing customers to order on mobile devices, and delivery options, are producing even more enthusiasm among McDonald's investors. If the company can keep succeeding in connecting with its customers, further profit gains are likely.
Apple is fresher than ever
Finally, Apple takes the No. 3 spot among Dow performers in the first half of 2017. The upward trajectory in the stock has taken Apple's market capitalization above the $750 billion mark, and strong earnings have only lifted the stock ever higher. Although most investors still look at Apple's sales of hardware, like the iPhone and Mac lines, as being the company's bread and butter, the role that services play in total revenue has become more important lately. Features like the App Store, Apple Pay, iCloud storage, and AppleCare produce recurring revenue for Apple, and they also demonstrate the value that customers put on the Apple ecosystem.
Going forward, Apple is working on numerous initiatives, including artificial intelligence, autonomous driving, and augmented reality. So far, investors aren't yet sure exactly what the next huge innovation for Apple will be, but the coming release of the iPhone 8 has most investors satisfied with the near-term trajectory for the company. Even at a high valuation, Apple has more room to run if it can keep generating new pathways for growth.
The Dow has done well so far in 2017, and these three stocks are largely responsible. If they can continue to rise, then the Dow will likely see a favorable end to the year and keep doing well in 2018 and beyond.
