November has been a busy month for stocks. Major indexes have soared on generally positive earnings reports and macroeconomic data that have convinced investors that the Federal Reserve is done raising interest rates. Specifically, the October Consumer Price Index was cooler than expected, leading to stocks soaring on Nov. 14 as investors adjusted their interest rate forecasts.
This month has been a welcome recovery from October, when all three indexes declined, continuing a downward trend that started in July. Let's take a look at the three best-performing Dow stocks from October to see if any of them are worth buying now.
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1. Verizon
Verizon (VZ 1.17%) soared on its earnings report in late October as the company topped estimates, reporting 100,000 postpaid phone net additions, and said it had obtained more C-band spectrum to help improve its coverage and fix a major reason for its market share losses in recent years.
Shares gained in part because they had already fallen so sharply over previous years on concerns of anemic growth and stagnant profits. The rebound seemed to come because Verizon stock had gotten cheap enough to make it attractive, especially with a dividend yield of around 7%.
In November, the stock has continued to move higher (up 6.4% as of this writing), benefiting from the macroeconomic tailwinds cited above. The stock is down roughly 5% for the year. After the recent earnings report, it seems like the worst is behind Verizon, and with its dividend yield still at 7%, the stock looks compelling for dividend investors.
2. Nike
Nike (NKE 0.19%) gained in October, riding the momentum from a strong first-quarter earnings report on the last day of September.
The results made it clear that the sportswear giant is still facing headwinds, as revenue rose 2% to $13 billion and earnings per share increased by 1% to $0.94.
Despite the weak growth, Nike still easily beat estimates on the top and bottom lines, showing how weak the analyst consensus has become in the consumer discretionary sector.
There was little news out on Nike in October, but the better-than-expected earnings results seemed to be enough to drive the stock higher, and it continued to gain into November, boosted by the inflation report and other news. The stock remains down roughly 8% for the year.
Nike stock is expensive, with a price-to-earnings ratio of 33, but it remains the clear leader in its industry. It should continue to pay off for long-term investors.
3. Microsoft
Microsoft (MSFT 1.82%) was another big winner last month as the tech giant also delivered a strong earnings report and continued to benefit from excitement around AI.
In addition to the earnings-related pop, Microsoft stock also gained on Oct. 6 on a report from The Information that said it was getting ready to release a new artificial intelligence chip, which could help advance its own AI ambitions and make it less dependent on Nvidia's chips.
The company also finally closed on its acquisition of Activision Blizzard in mid-October after an 18-month process that featured multiple regulatory reviews. The Activision acquisition will significantly strengthen Microsoft's position in gaming, and investors welcomed the end of uncertainty over whether the acquisition would go through. The company also signed Amazon as a client for its 365 Cloud productivity software, striking a $1 billion deal over the next five years.
Microsoft then beat estimates handily in its first-quarter earnings report on Oct. 24 and reported strong growth in its Azure cloud infrastructure division.
The stock continued to gain in November, tacking on another 10% through Nov. 21 on positive macroeconomic data. It's up 57% so far this year. The stock also enjoyed a bounce when it announced on Nov. 19 that it had struck a deal to hire Sam Altman after OpenAI fired him. However, Altman quickly returned to OpenAI.
Microsoft appears to be the leader in the generative AI race and while Microsoft stock is expensive, it continues to look like a winner as the AI market develops.
