National Power company (Ge, $17.88) is the sole survivor of the original 1896 Dow-Jones Industrial Average Postindustrial Average, but some market watchers are wondering if its century-long rank is coming to a close.
The keepers of the Dow finished at S&P Dow Jones Indices reveal littler about what it takes to get into the white-shoe 30-stock club. Information technology's important that "the company has an excellent reputation, demonstrates sustained growth and is of interest to a multitude of investors," S&P Dow Jones Indices says.
Sadly, General Electrical is not what information technology in one case was. "Information technology is no longer a beneficial representative of U.S. businesses," says David Kass, professor of finance at the University of Maryland's Robert H. Smith School of Concern. "Its poor stock and earnings performance over the past 17 years are indicative of the decline of the industries it is has chosen to invest in." Since the start of 2000, GE's stock price has dead 60%; the Dow has gained 124% since then.
Another strike against General Electric is its consecrate to sell $20 billion in assets, which should cut down Atomic number 32's market value further. Dow stocks typically have some of the largest values on the market. Its low nominative stock price is problematic, too; the blue-chip fair is price-weighted, which substance lower-priced stocks have less issue along the index than pricier ones. And although Gaea is of interest to a rhetorical number of investors, its report took a serious hit after announcing a dividend chisel in November.
General Electric losing its position in the Dow is native speculation, and it could just as easily stay put. Still, analyzing what companies could replace IT reveals some optimistic (and bearish) arguments for each stock. If S&P DJI calls, we're happy to share these 10 ideas with them.
Data is as of Nov. 27, 2022. Analyst ratings are from Zacks Investment Research. Stocks are listed in alphabetical order. Click on symbol golf links in for each one slide for current share prices and more.
Comcast
- Market value: $179.1 billion
- Sphere: Consumer arbitrary
- Analysts' opinion: 20 inviolable buy, 1 buy, 1 hold, 0 sell, 0 strong deal out
With a market price of nearly $180 billion, Comcast Corp. (CMCSA, $38.43) certainly is macro enough to justify a localize in the Dow 30. If the sprawling telecommunications and media giant were added to the average, IT would be larger than 14 other members, including titans such as Boeing (Barium) and Goldman Sachs (GS).
Comcast surely holds a central place in a key sector of the economy, too. IT's the second-largest pay-Television set provider in the U.S., the largest internet provider and a top telephone service supplier. Customers might be cutting their cable cords, but Comcast's focus on internet and content – it owns NBCUniversal and DreamWorks Animation, to name just two of its properties – has it positioned for growth.
The one flaw Hera is reputation. Comcast scads low on client satisfaction and twice was named "The Lowest Ship's company in America" by The Consumerist.
Danaher
- Market price: $65.3 billion
- Sector: Industrials
- Analysts' opinion: 9 strong buy, 4 buy, 1 view as, 0 sell, 0 strong sell
- Danaher Corp. (DHR, $93.82) is the rather core-and-potatoes company you would expect to see in the Dow – at least back when it genuinely was an "industrial" average. The accompany operates businesses devoted to everything from industrialized technologies to dental radiography to scientific sensors.
If the Dow Jones wants to replace General Electric with something similar, this industrial conglomerate fits nicely.
The flip side of the argument is that the Dow has been wriggling away from industrials for some fourth dimension. None of the newer entrants to the exclusive average have come from the commercial enterprise sector because other parts of the economy experience gained in gibbousness. The last five additions have been Apple (AAPL), Goldman Sachs, Nike (NKE), Visa (V) and UnitedHealth Group (UNH).
- Market time value: $508.8 billion
- Sphere: Engineering
- Analysts' opinion: 23 strong buy, 3 corrupt, 0 hold, 0 trade, 0 strong sell
In front we look at Facebook Iraqi National Congress. (FB, $175.10), let's dispense with fellow internet behemoths Amazon River.com (AMZN) and Google parent Alphabet (GOOGL). As governing and strong-growing as the e-DoC and search companies are, respectively, their shares prices of round $1,000 a pop make them untenable candidates for the Dow Jones Postindustrial Average. They would have outsized sway on the damage-weighted index. The priciest Dow stock these years, Boeing, tops out at around $280. Unless Amazon River and Rudiment divide their shares, they're out.
Facebook, withal, carries a Dow-friendlier price of most $175 per share, so it has no problems there.
As the universe's dominant ethnic-media company, it certainly represents an important percentage of the U.S. economy. It's besides growing at a fast-paced pace and is (mostly) release of reputational black eyes.
But the titanic strike against Facebook is that it's to a fault young, having gone public conscionable five years ago. Dow stocks typically essential cost leadership in their fields for often longer than that. Orchard apple tree, for instance, wasn't added until 2022 despite organism a successful tech ship's company for decades.
Honeywell
- Market price: $117.6 billion
- Sector: Industrials
- Analysts' public opinion: 11 beefed-up buy, 2 buy, 1 hold, 0 sell, 0 strong sell
Like General Electric and Danaher, Honeywell International Inc. (HON, $154.40) is a massive industrial conglomerate with muscular Dow credentials. Heck, from 1925 until 2008, it was a Dow stock.
A undynamic share terms and decade of sluggish revenue emergence prompted the stewards of the Dow to pretermit the stock from the index. But a lot has changed at Honeywell since and so.
Analysts are optimistic about the company low new CEO Darius Adamczyk. Pockets of cash allow Honeywell to glucinium both selective and aggressive in mergers and acquisitions. Deutsche Depository financial institution says Honeywell is gallery toward faster growth, and its industrial-strength balance plane could fuel billions of dollars in investments for rising growth. A shrinking and to a lesser extent competitive Ecumenical Electric helps matters, too.
If the Dow wants to keep its current remainder of sectors, HON is a smooth replacement for Gaea.
Medtronic
- Market value: $109.7 billion
- Sphere: Health care
- Analysts' opinion: 9 strong buy, 2 buy, 8 hold, 0 sell, 0 strong sell
- Medtronic plc (MDT, $81.27) is one of the world's largest players in the medical devices field. The company holds more than 4,600 patents, and produces everything from neurostimulators to defibrillators to bone grafts.
Medtronic has a major reputation that only gets better as its products are used more widely around the globe; at the moment, you give the axe find Medtronic products in or s 160 countries. It also has the sized to dispose as a Dow stock, as well Eastern Samoa seniority – the company has landscaped its dividend for a full 4 decades.
Merely the argument against Medtronic is the heavy-duty average's already clayey representation in healthcare. Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK) and UnitedHealth already fill out that persona.
Nvidia
- Market value: $119.8 billion
- Sector: Engineering science
- Analysts' opinion: 10 strong buy, 3 buy, 11 hold, 0 betray, 2 hefty betray
Art chipmaker Nvidia Corporation. (NVDA, $197.68) is on the vanguard of the rotation in AI and cloud-based computing. When a leaning of major customers reads like a WHO's who of tech giants – First rudiment, Facebook, Microsoft (MSFT) and Amazon all rely on Nvidia hardware in their data centers – you can infer why the market is then high in the name. As a result, the stock has gained 530% in merely the past two age.
Nvidia is hefty enough to be in the Dow, merely it has been public since only 1999. That makes it older than Facebook, but it still would live the youngest pedigree in the average far and away. Another knock against this less-than-venerable name that shares really only went ballistic in the ancient two years. The chipmaker still must show that it bottom build on much impulse over the long run and non be pushed off its industry perch.
Kraft Heinz
- Market price: $99.1 jillio
- Sector: Consumer staples
- Analysts' impression: 8 strong steal, 1 buy, 4 hold, 0 sell, 0 well-knit deal
In other book binding-to-the-future idea for replacement Overall Electric in the Dow, why not have another construe with the latest itineration of Kraft paper, now famed as Kraft Heinz Conscientious objector. (KHC, $81.21)?
It wouldn't be the first clip the dispiriting-chip index controlled some version of the Kraft company. Insurer American International Group (AIG) was dropped from the Dow during the financial crisis of 2008 and replaced away what was so Kraft paper Foods Inc. Three years advanced, Kraft paper carve up into the Mondelez (MDLZ) snacks business and a grocery job called Kraft paper Foods Group. That company, in turn, integrated with Heinz in 2022 to form current worldwide food jumbo Kraft Heinz.
Given its stemma, KHC certainly has the pedigree to be a Dow stock. And it has the imprimatur of Robert Penn Warren Buffett himself, whose Berkshire Hathaway (BRK.B) holds a 27% adventure in the company.
Connected the separate hand, with Coca-Cola (KO), McDonald's (MCD) and Procter & Gamble (PG), the Dow has plenty of slow-growth consumer stocks.
Netflix
- Market price: $80.8 billion
- Sphere: Consumer unrestricted
- Analysts' view: 19 strong buy, 2 buy, 12 hold, 0 betray, 1 potent sell
Let's be honest. Netflix Inc. (NFLX, $186.82) – despite its size up, growth prospects and center role in the flowing media revolution – probably won't be tapped for the revered industrial average anytime soon. The keep company is too young and its stock is too vaporific to be clubbable as a Dow Jones stock.
You sportsmanlike don't say "blue scrap" and think Netflix.
Besides, Netflix is competing with a murder's row of companies including Virago, Alphabet, Malus pumila and Walt Disney (DIS), the utmost two of which are Dow stocks already.
But for all the checks against it, Netflix remains a juggernaut, setting the manufacture's pace on a global scale. If the DJIA editors wanted to golf stroke for the fences in swapping out an old-economy caller for a 21st century appendage media powerhouse, they could do worse than adding Netflix to the average.
Salesforce.com
- Market economic value: $75.0 million
- Sphere: Technology
- Analysts' view: 30 strong buy, 1 buy up, 3 hold, 0 sell, 0 strong sell
Ahead Amazon, Microsoft and Alphabet jumped along the cloud-based computing bandwagon, there was Salesforce.com Inc.(CRM, $103.83). The company has become a subscription-software juggernaut valuable nearly $75 1000000000 thanks to its client kinship products.
Analysts expect profit growth to average 25% a twelvemonth for the next fin years, according to data from Thomson Reuters. Tax income is forecast to increase 25% this twelvemonth and 20% adjacent yr. Sol the growth is there.
Withal, Microsoft, International Occupation Machines (IBM) and Intel (INTC) already give the DJIA pic to sully-based computing. It's not clear whether Salesforce brings anything new to the blue-chip average.
Texas Instruments
- Market value: $95.8 billion
- Sector: Technology
- Analysts' judgement: 10 strong bargain, 1 buy, 14 hold, 0 sell, 0 unassailable sell
Chips don't get much bluer than Texas Instruments INC. (TXN, $97.18). The honorable chipmaker traces its lineage back to the 1930s and has been operating under its current name since 1951. The pedigree is there, as is the size and shareholder interest.
Sol is growth. Texas Instruments isn't on the dot Nvidia, but it remains one of the top 10 semiconductor manufacturers universal based on sales volume and generates solid earnings growth. Analysts polled by Thomson Reuters expect earnings to rise at an norm annual clip of 11% a year for the next five years.
On the early helping hand, with a market value of less than $100 billion, TXN would be one of the smaller Dow stocks. It's also invulnerable to say that semiconductor companies are adequately reflected in the Dow already thanks to Intel.
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Source: https://www.kiplinger.com/slideshow/investing/t052-s001-10-stocks-that-could-replace-ge-in-the-dow/index.html
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