The Dow Jones Industrial Average was the poorest performer of the three major indexes last year, gaining 14%, which placed it well behind the S&P 500's advance of 24% and the Nasdaq Composite's 43% surge.
However, the Dow Jones did accomplish something that neither of the other two major indexes did. It touched a new all-time high in December, signaling a new bull market for the Dow.
While the blue chip index may not hold the clout that it used to, the fact that it's already hit a new record since the pandemic shows it's outperformed the other two major indexes since the pandemic-era peak. If you're looking to buy some blue chip stocks for 2024, keep reading to see Wall Street's top three picks this year from the Dow Jones Industrials.
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1. Walt Disney (20% upside)
There's no other Dow Jones stock Wall Street is more bullish on this year than Disney (DIS 0.62%), as the average analyst is calling for it to gain 20% in 2024. Of the 22 analysts following the stock, 17 rate it a buy, and five call it a hold, according to Tipranks.
It's easy to see why the Street has high expectations for the entertainment giant this year. Disney has been a laggard for years, underperforming the market in each of the last three years, but its efforts to reinvent itself in a digital-first world may finally be starting to bear fruit. CEO Bob Iger recently said the company had turned the page from fixing the business to building it.
NYSE: DIS
Key Data Points
Disney is targeting a profit from its streaming division by the end of its fiscal year, which ends in September, and the company seems to be well on its way to getting there as it narrowed its loss in its direct-to-consumer segment in its most recent quarter from $1.4 billion in the quarter a year ago to $420 million, and recent price hikes at Disney+ should help it get into the black as well.
Additionally, the company has a strong slate of box office releases this year, including new editions of Inside Out, Deadpool, and Lion King, which should help the company make up for a poor showing in the theaters in 2023.
Finally, Disney stock looks cheap based on historical levels, down more than 55% from its all-time high, even though the business has continued to grow. That leaves plenty of room for improvement in the stock if the company can overcome the challenges in its media business.
2. Nike (21% upside)
Nike's (NKE 3.22%) average price target calls for nearly as much gains as Disney's does, and like Disney, Nike is also a consumer discretionary stock coming off a rough year.
Of the 30 analysts covering the stock, 20 rate it a buy, nine rate it a hold, and just one calls it a sell.
Like a lot of other apparel retailers, Nike has seen weak growth over the last year as concerns about inflation have weighed on consumer spending, and consumers with money to spend seem to prefer to spend it on services like travel and restaurants now that the pandemic is over. As a result of those headwinds, Nike stock fell 7% over the last month, significantly underperforming the broad market.
NYSE: NKE
Key Data Points
In its most recent quarter, revenue rose just 1% as the company noted soft demand. However, there was one item in the report to get excited about. Despite the weak revenue growth, Nike was able to expand margins and grow earnings per share by 21% to $1.03 in part due to a 14% reduction in inventories, allowing the company to avoid the markdowns that plagued it in the quarter in the previous year.
Though the company expects headwinds to persist through the second half of its fiscal year, Wall Street seems to be banking on a comeback with the help of lower interest rates and expected economic recovery. Additionally, the Summer Olympics could fuel demand for Nike gear.
Nike stock is still pricey, but it deserves to trade at a premium given its brand strength and long history of success. The stock is unlikely to have two down years in a row while the market rises.
3. Chevron (19% upside)
Finally, Chevron (CVX 0.95%) is one of Wall Street's top Dow picks for 2024, hailing from a completely different industry from Disney and Nike. The Street expects Chevron to gain 18.7%, and 12 of the 17 analysts covering the stock rank it a buy, with the remaining five calling it a hold.
NYSE: CVX
Key Data Points
Like Nike, Chevron's shares fell last year, down 17%, as the elevated oil prices were not enough to counter the wide range of challenges facing the oil major as Wall Street disliked its deal to buy Hess, and its profits fell following a boom year in 2022. Just days into the new year, Chevron announced $4 billion of writedowns due to regulations in California, revealing yet another headache for the oil stock.
Chevron's price target for 2024 seems to reflect Wall Street's view that oil prices will remain elevated as wars rage in Gaza and Ukraine, the Chinese economy theoretically starts to strengthen, and the U.S. economy possibly starts to recover. If all of this does indeed happen as expected, it should boost demand for oil and support elevated prices. Initially, the Organization of the Petroleum Exporting Countries has seemed prepared to cut production as necessary.
Like most oil stocks, Chevron stock is affordably priced at a price-to-earnings ratio of 11, and it offers an appealing dividend yield of 4%. However, the company's performance in 2024 will be controlled by oil prices more than anything else.
