Many investors start their searches for new stocks to buy by looking at those that have been beaten down. That strategy makes sense. Why pay a higher price for a quality company when you can pay a lower one for it?
Not every great pick has to be purchased while it's discounted, however. Plenty of stocks are still worth stepping into even when they're on their way up.
Investors have been flocking to these three Dow Jones Industrial Average (^DJI 0.40%) constituents lately, pushing their valuations higher. But they're still worth buying at their present prices.
1. Salesforce.com
It's more than a little amazing that after being in business for 24 years, Salesforce.com (CRM 0.42%) is still growing its top and bottom lines at double-digit percentage paces. That's usually enough time for a company to saturate its market, face new competition, and even watch a rival come up with a whole new kind of solution to the problem that the pioneering company addresses.
Yet there it is. Salesforce's sales are expected to improve by more than 10% this fiscal year and next, driving its profits up from $5.24 per share last fiscal year to $8.99 per share in its next fiscal year.
Credit the functionality of the product itself for this ongoing growth. Salesforce provides an excellent online suite of customer relationship management tools. Market researcher Gartner rated Salesforce's cloud-based software, in fact, as 2022's best option among all sales force automation platforms. It's the 16th year in a row Salesforce's software-as-a-service has been named a leader within the category.
The thing is, the company could continue growing at its current clip for another 24 years.
It's a bit philosophical, but Salesforce.com was always more than a little ahead of its time. It was one of the earliest companies to successfully commercialize cloud computing technology, offering browser-based access to remotely stored information even before the phrase "cloud computing" was in common use. It has remained cutting edge. For instance, while the use of artificial intelligence in conversational platforms is still in its infancy, Salesforce has used AI to offer a superior product since 2014.
And the company continued to build on that foundation. Between June and August of this year, it's launching 16 different artificial intelligence tools that will make its platform even more powerful and easy to use.
Still, these improvements will still only scratch the surface of how much more Salesforce.com could continue evolving.
2. Procter & Gamble
Consumer staples giant Procter & Gamble (PG -0.78%) will likely never grow at the same pace as Salesforce. (If it ever does, what would be a fantastic year for P&G would be a very disappointing one from Salesforce.)
However, there are a couple of reasons investors continued to bid up shares of the slow-moving company to industry-high premiums: its reliable results and equally reliable dividends.
Procter & Gamble is the name behind a host of familiar brands ranging from Pampers diapers to Tide detergent to Bounty paper towels to Gillette razors. These are goods most consumers are so familiar with that they buy them out of habit more than for their value. And, with one of the biggest advertising budgets in the world, the company's equipped to hold its place at the top of consumers' minds.
But perhaps the more important reasons you should be willing to pay a premium for P&G shares are its pricing power and the persistent profits that ultimately drive its dividend payments.
Last quarter's numbers provide a prime example of this dynamic. Organic sales (excluding the impact of changing foreign currency exchange rates) were up 8% year over year, with most of that growth coming from price increases. Nor was the company passing along higher costs of its own to consumers. Last quarter's cost of goods sold actually fell 2% year over year.
Its underlying brand strength is a big reason P&G has not only been able to pay a dividend every year for the past 133 years, but has raised its annual payouts every year for the past 67 years. You won't find too many other tickers out there with comparable dividend pedigrees, even within the Dow Jones Industrial Average.
3. Visa
Last but not least, add Visa (V -0.23%) to your list of Dow stocks to buy more of this month. Its best is yet to come.
OK, it doesn't have the same impressive dividend history as Procter & Gamble. It doesn't even have as much history as a publicly traded company as Salesforce. Visa only went public in 2008, when the consortium of its founding banks decided it was time to let the organization fly on its own.
What the company lacks in history, it more than makes up for in raw growth firepower, however. Its revenue has quintupled since its IPO, while per-share earnings gained even more. Analysts predict earnings growth of more than 10% every year through 2027, with revenue on pace to be nearly 50% more than Visa's current top line by then.
The underpinnings for this past and future growth are the ways consumers view payment cards. At one point, they were seen primarily as a means of paying for unusual (and unusually big) one-off purchases. Now they're used routinely as an alternative to cash.
A report from the Federal Reserve Bank of San Francisco says that in 2022, a record-breaking 60% of all payments made in the United States were card-based. Most of this growth came from the decreasing use of cash, which only accounted for 18% of last year's payments. That was down from 31% as recently as 2016.
That remaining 18%, of course, is a growth opportunity for Visa. It'll win its fair share of this business too, as long as the company continues to find ways of getting more cards into people's hands and provide more incentives to use them. To this end, know that's precisely what all of its worldwide innovation centers are purposed with doing.
