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The 3 Best Dow Jones Stocks So Far in 2020

By Dan Caplinger – Jul 5, 2020 at 11:02AM

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Find out which of the 30 Dow Jones Industrials are faring the best.

2020 has been a roller-coaster ride for investors, as the coronavirus pandemic has created unprecedented levels of economic and political uncertainty. After having plunged during the first three months of the year, the Dow Jones Industrials (^DJI) have bounced back sharply from their worst levels of the year. Yet even with the rebound, the average is down for the year, and 80% of the 30 stocks that make up the Dow have lost ground year to date.

That's left a select group of strong contenders vying for the top spots in the Dow at the halfway mark. Below, we'll look at which three stocks reign supreme and what their prospects look like for the rest of 2020 and beyond.

AAPL Chart

AAPL data by YCharts.

Microsoft, up 31%

Amid a couple dozen losing stocks in the Dow, Microsoft (MSFT -0.18%) is doing a lot to limit the average's losses. What's particularly impressive about the software giant's 31% rise so far this year is that it comes on the heels of an even sharper 55% climb for Microsoft in 2019.

Microsoft came into 2020 with a lot of positive momentum from its cloud computing initiatives, which have included making its most popular software packages available on a subscription basis to users regardless of what operating system they're using. That move from CEO Satya Nadella has paid off handsomely. Moreover, Microsoft's capabilities have proven essential to businesses trying to adapt to the COVID-19 environment, and that's helping to lead the stock higher as well. With no sign in sight of any end to the digital revolution, investors have high hopes that Microsoft can keep gaining ground and delivering great returns for shareholders.

Four number balloons spelling out 2020.

Image source: Getty Images.

Apple, up 24%

Delivering the other half of the tech one-two punch in 2020 is Apple (AAPL 0.19%). Its stock's gains are trailing Microsoft this year, but that's a reversal from the leadership role that Apple played in 2019 with its amazing 86% advance. With the ongoing need for mobile device connectivity, Apple has remained a consumer favorite around the world and has generally overcome trade-related tensions that held back some of its rivals.

Apple has followed its playbook well so far in 2020, putting greater emphasis on its services while making incremental progress in adding functionality to its iPhone line. Many investors are looking forward to the adoption of 5G wireless network standards in the U.S., and Apple is apparently set to bring out its first 5G-compatible iPhone before the end of the year. That could trigger a huge new upgrade cycle, especially among users who've taken greater advantage of wireless networks in their remote work. If demand is strong, then it could mark a huge win for Apple and help support further gains for its shares.

Home Depot, up 14%

Investors in home-improvement giant Home Depot (HD 0.95%) can't boast the amazing returns of Apple or Microsoft in the past year and a half, but they have to be satisfied with a solid 14% rise on top of last year's 27% gain. Even though the retailer has taken a hit from the coronavirus crisis, it's done a good job of adapting to the changing needs of its customers.

With people stuck at home, projects around the house have been a natural way to utilize available time, and Home Depot has cashed in on the potential there. With a key shift toward its e-commerce channel, Home Depot has been able to make products available both by delivery and with curbside store pickup, and that's managed to keep things going even when many other retailers faced complete closures. Expenses have been higher, but the company has gotten kudos for treating workers well, and Home Depot has proven its staying power in a way that's building confidence for the future.

Can the Dow keep recovering?

The Dow is still off almost 10% for the year. That's bad news for investors, but it makes the performance of these three fast-growing stocks even more impressive. Shareholders can expect even more from Home Depot, Apple, and Microsoft as 2020 continues.

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Dan Caplinger owns shares of Apple. The Motley Fool owns shares of and recommends Apple, Home Depot, and Microsoft and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2021 $210 calls on Home Depot, and long January 2021 $120 calls on Home Depot. The Motley Fool has a disclosure policy.

Stocks Mentioned

Apple Stock Quote
$148.31 (0.19%) $0.28
Microsoft Stock Quote
$254.69 (-0.18%) $0.45
Home Depot Stock Quote
Home Depot
$327.07 (0.95%) $3.08
Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$34,589.77 (%)

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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