These are tricky times for investors. Oh, the market's never exactly easy to navigate. Things are proving particularly unpredictable right now, however. Some tickers are performing well when they seemingly shouldn't be, while others are lagging when they should be soaring. Never even mind all the uncertainty stemming from the ongoing tariff wars.
If you can take a step back and look through all the near-term fuzziness at the bigger picture though, many of the market's long-term winners become clear. Three of its best bets right now, in fact, are blue chip stocks that help make up the Dow Jones Industrial Average. Here's a closer look at each one and why they're all likely to soar this year ... and beyond.
Image source: Getty Images.
1. Home Depot
At first blush, Home Depot (HD 0.07%) seems like a name to avoid right now. Consumers are feeling fiscally pinched, and mortgage loan rates are holding near multi-year highs. Both work against a home improvement retailer that relies on professional contractors for half of its revenue (which, of course, means the other half comes from consumers themselves).
Be wary of jumping to conclusions based on a mere perception of data, however. Things may not be quite as dire as they appear at this time.
Take, for instance, last month's sales of newly built homes. Despite the challenging economic environment, the U.S. Census Bureau reports April's new home sales reached a multi-year high annualized pace of 743,000 units. Meanwhile, the Conference Board's consumer-confidence measure for May bounced back quite a bit from April's plunge, with expectations that international trade deals will turn constructive again soon enough. Harvard University's Leading Indicator of Remodeling Activity (LIRA) index indicates that remodeling and home-upgrade outlays are likely to grow 2.5% through the first quarter of the coming year. That's not exactly thrilling, but it is a nice turnaround from last year's 1.5% dip.
This stock's weakness since the beginning of the year doesn't reflect any of this upside.
NYSE: HD
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Just don't tarry if you want to capitalize on the mostly unmerited pullback. Even if you're not looking for dividend income right now, you'll be plugging in while this ticker's forward-looking dividend yield stands at a healthy 2.5%. That's not a bad little add-on perk for owning a stock that could -- and likely will -- start soaring at the first real hint of an economic rebound. It's just going to take a little patience.
2. Walt Disney
Speaking of patience, there's a light at the end of the tunnel for Walt Disney (DIS +0.61%) shareholders who've stuck with the entertainment stock through three long years of underperformance.
NYSE: DIS
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What's changed? Almost everything, really.
Take its streaming business as an example. After years of complicated and sometimes conflicted partial ownership of Hulu and the reporting of its specific results, the company is offloading this particular streaming service onto FuboTV so it can focus on its flagship platform Disney+. It's also still on schedule to debut a stand-alone streaming version of ESPN later this year, pitting it directly against its cable television partners that offer the very same programming. Although this could accelerate the cord-cutting movement that's already hurting Disney's other cable TV channels like The Disney Channel, National Geographic, Freeform, and broadcast network ABC, on balance, the company is better served by offering this sports-focused streaming service that consumers increasingly want. And this is all taking shape at a time when Disney's collective non-sports streaming services (likely led by Disney+) are starting to show a consistent operating income anyway.
Connect the dots. The initial vision of sustainable streaming dominance is finally coming to fruition.
In the meantime, higher theme park ticket prices don't appear to be deterring crowds even a little bit -- its parks are still as packed as they've ever been. During March, in fact, heavy spring break foot traffic meant its theme parks were forced to deny entry to many walk-up, would-be guests. To this end, last quarter's parks and experiences revenue improved another 9% year over year, driving a 13% uptick in operating income. It's encouraging simply because parks and experiences account for nearly 40% of Disney's total revenue and are its biggest profit producer, consistently accounting for more than half of its bottom line.
There's still plenty to figure out to be sure, like its film business, which has lost its magic of late. But there's hope on this front as well. CEO Bob Iger commented in early May that the releases scheduled for the next 18 months are some of the best work Disney's movie studio has done since 2019.
Bottom line? This is the regrouped Walt Disney Company the world's been waiting on. Now the stock just needs the right nudge.
3. Walmart
Finally, add Walmart (WMT +0.09%) to your list of Dow stocks that could start climbing this year and continue climbing indefinitely.
You know the company. Walmart is, of course, the world's biggest brick-and-mortar retailer, doing $681 billion worth of business last year, and turning $29.7 billion of that into operating income and about $20 billion in net income. Revenue improved 5.6% year over year, while profits jumped nearly 10% (and per-share profits grew a little more than 13% year over year). Both are extensions of well-established trends that should carry on at the same basic pace for at least the next few years.
This alone isn't the reason you'll want to have a stake in Walmart while shares are still stuck in a bit of a rut since peaking in February, though.
NASDAQ: WMT
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It's not easy to see unless you're looking for it. But the consumer/retailing landscape is changing. Value means more than brand again, and shoppers don't really care where or how they find value. That's why Walmart repeatedly reported market share growth among households earning in excess of $100,000 in 2023 and 2024 ... when inflation was relentless.
The retailer's ongoing evolution isn't solely about value. It's delivering the convenience consumers are increasingly seeking by offering actual delivery. Last quarter's membership income (mostly from Walmart+ memberships) was up nearly 15% year over year. Although the company itself doesn't regularly report the number, it's easily in the tens of millions now and clearly still growing.
Walmart also continues to blur the lines separating retailing, media, and advertising. Last year's worldwide advertising revenue reached $4.4 billion, up 27% year over year. While the bulk of that came from brands promoting their goods at Walmart.com, the company's acquisition of connected-television brand Vizio, completed in December, opens the door to a new opportunity to connect itself and its vendors with nearly 20 million TV watchers.
Simply put, this isn't the Walmart of yesteryear. This is a retailer that's quietly become a powerful omnichannel outfit that does digital about as well as any rival. The fact that it's bigger than any other brick-and-mortar retailer just means it enjoys an unfair advantage whenever it pulls one of the aforementioned growth levers.
The market should start seeing -- and appreciating -- this not-so-subtle nuance sooner rather than later.
