The Dow Jones Industrial Average tracks the performance of 30 blue chip stocks. These are some of the world's strongest companies. The index has climbed about 17,000% since 1930.
This is also why some investors like to bottom fish for undervalued stocks among the Dow Jones' worst performers each year. So far in 2025, Apple (AAPL +0.73%) and Nike (NKE 0.09%) are swimming at the bottom. Both stocks are down over 20% year to date.
Let's see if either is worth buying right now.
Image source: Getty Images.
1. Apple
Apple stock has slid 21% year to date. Weak iPhone sales, especially in China, have weighed on the stock's performance. The weak growth from its largest product category raises concerns about Apple's strategy to tackle the burgeoning opportunity in artificial intelligence (AI).
Apple launched its AI platform, Apple Intelligence, last year. This brought several new AI features to its Mac and iOS operating system. But Apple Intelligence hasn't translated to the strong sales cycle investors were expecting.
In the first half of fiscal 2025, total net sales were $219 billion, up just 4% year over year. This was mostly driven by double-digit growth in services (e.g. apps and subscriptions). Product sales posted just a 2% year-over-year increase in the most recent quarter.
NASDAQ: AAPL
Key Data Points
Apple has tremendous brand power, and it's loaded with cash. The company hauled in $98 billion of free cash flow over the last year. It certainly has the money to make some moves in AI. But it is concerning that Apple's former chief design officer, Jony Ive -- who was instrumental in designing the iPhone and other products until leaving Apple in 2019 -- recently merged his design company with OpenAI and will consult the AI leader on new hardware products.
The fact that Ive is not coming back to Apple, but instead is joining the company that brought us ChatGPT speaks loud and clear that Apple is at risk of being disrupted in the next decade. Apple still has its "walled garden" advantage of hardware and services that many people attribute to a quality user experience. But it needs to make a bigger splash in AI than it has so far.
Given these developments, the stock doesn't look that attractive from a valuation standpoint. Its forward P/E of 27 looks expensive against analysts' estimates for 10% annualized earnings growth over the long term. Investors looking for better return prospects might want to wait until Apple settles on a more promising AI strategy to grow sales before buying shares.
Image source: Nike.
2. Nike
Nike stock is down 21% this year and off by a stunning 66% since its previous peak four years ago. Declining sales and earnings caused Nike to bring in a new CEO last year. Company veteran Elliott Hill is aiming to return Nike to profitable growth, and if successful, could make the stock a bargain at current share prices.
The company is on pace to report earnings per share of $1.93 for fiscal 2025 based on consensus analyst estimates. The stock's price-to-earnings multiple looks fair based on this year's estimate, but Nike is capable of much higher earnings. The stock is currently trading at 16 times its $3.75 peak earnings in fiscal 2022, which seems too low for a brand of this caliber.
I believe Nike is a solid investment at these share prices. This is one of the world's iconic brands, generating $47 billion in trailing-12-month sales. Roughly two-thirds of that comes from footwear. Nike is still the leader in an industry that has a long history of growth and is expected to reach $677 billion by 2030, according to Grand View Research.
NYSE: NKE
Key Data Points
Nike has a straightforward path to growth. It involves investing in new products and shifting the current sales mix to those categories that are seeing the strongest demand. On that score, the company is seeing healthy demand in running shoes, such as the Peg 41 and Vomero 18. Despite posting a 9% year-over-year decline in total sales, Nike noted growth in running and training products last quarter.
To improve margins and grow earnings, Nike is tightening its inventory to better match supply and demand. Certain products like Air Jordan 1 and Dunk remain above demand levels, which could weigh on margins in the near term. However, as inventory tightens up over the next year, it should lead to more full-price sales and less discounting.
Wall Street analysts are expecting Nike to report earnings of $2.68 in fiscal 2026, representing a 38% increase over fiscal 2025 estimates. By 2030, Nike's earnings could be back to its previous peak, if not at new highs, and that could spell market-beating returns for investors.
