There's not a lot of love for the Dow Jones Industrial Average these days. It's limited to just 30 large stocks, naturally. The Dow 30 also gets knocked around because it's limited in representation since it's a price-weighted index, unlike other indexes that are weighted by market cap for a more accurate reading. This doesn't mean that you can't find great stocks within the two and a half dozen names in there.
Home Depot (HD -0.16%), Walt Disney (DIS 2.47%), and Cisco Systems (CSCO -0.02%) are three components of the Dow Jones Industrial Average that I like. Let's get into why you may want to consider investing in these three stocks this month.
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Home Depot
There are a few trends working in Home Depot's favor. The real estate boom is naturally finding people buying or renting new digs, and there's always something that needs tweaking to make a house a home. Home Depot has you covered. The pandemic also helped trigger both the suburbanization trend -- with folks moving from cramped metropolitan apartments into larger homes in the suburbs -- and the need to create defined workspaces at home. The country's leading home improvement store cashed in on the literal and figurative movement.
A lot of retailers slumped in 2020, but Home Depot kicked things up a notch. Revenue rose 20% for the fiscal year that ended in January of last year. It wasn't a fluke. Revenue rose 14% in its latest fiscal year.
There are legit concerns about what will happen to Home Depot as rates rise through 2022. Will the real estate boom end? It will be harder to justify refinancing a mortgage for home improvement projects. However, folks do entertain new projects for the home when they realize they're going to be in a place for longer than they think. Home Depot should continue to benefit for the changes. Trading at 20 times earnings with a decent 2.4% yield isn't too shabby for the folks with the orange aprons.
Walt Disney
No one knows how to tell a fairy tale like Disney, and investors hope that they're the ones that will be living happily ever after. The House of Mouse was surprisingly more like Pluto last year. It was the biggest dog of the Dow 30 in terms of annual return last year. The irony here is that Disney did a lot to get back on track in 2021.
Disneyland reopened. Its cruise line started up again. Disney got back to dominating the box office. Disney+ closed out the calendar year with 129.8 million subscribers, a stunning feat for a service that launched just two years earlier. Content is still king in this world, and Disney rules the roost on that front.
Disney trades at the highest multiple of the three stocks on this list, fetching a stiff 33 times forward earnings. It also hasn't returned the dividend it suspended two years ago at the start of the pandemic. There are still plenty of reasons to pay a premium for a yield-free entertainment giant that owns many of the world's most beloved franchises and media assets.
Cisco Systems
It's fitting that we're in March. It was during this month -- 22 years ago -- that Cisco briefly became the world's most valuable company. Cisco's market cap of nearly $570 billion reigned supreme, and this was the company providing the routers, switches, and firewalls to connect us all in the dot-com revolution. The bubble popped around that time, and Cisco's market cap has never recovered. Most tech giants have gone on to hit fresh all-time highs, but Cisco's current market cap of $227 billion finds it buried under 32 other U.S.-listed stocks with greater valuations.
Cisco may be forgotten to a large extent, but it's not lost. It's still growing. Revenue and earnings are expected to keep climbing at a mid single-digit clip for the next few years. The market is more competitive, but the global opportunity is larger than ever. With a forward earnings multiple in the teens and a respectable 2.8% yield, it's an easy Dow stock to get behind.
Home Depot, Disney, and Cisco are looking good here. They are three of the companies in the Dow that you can buy hand over fist in March.
