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Wall Street’s in Love with the Dow Jones – With 5 Big Exceptions

Last Updated September 23, 2020 1:54 PM
Josiah Wilmoth
Last Updated September 23, 2020 1:54 PM
  • Wall Street loves the Dow 30, but CCN.com analysis found that analysts aren’t enthusiastic about five of the index’s members.
  • At least one of those stocks is a major surprise.
  • Merck and Microsoft headline the DJIA components Wall Street does recommend.

While investors remain divided about the tenacity of the stock market’s recent recovery, Wall Street analysts remain remarkably bullish on the 30 individual stocks that make up the Dow Jones Industrial Average (DJIA). Well, analysts are bullish on 25 of them anyway.

After CNBC published helpful data about Wall Street’s favorite DJIA components, we were curious about which Dow stocks are in the dog house. What we found might surprise you.

These Are the Dow Jones Stocks in Wall Street’s Dog House

caterpillar stock
Caterpillar is one of just five Dow Jones stocks without a consensus “buy” rating. | Source: astudio/Shutterstock.com

Not a single stock in 30-member has a consensus “sell” rating, according to data from TipRanks. But that doesn’t mean Wall Street thinks every Dow Jones stock is a buy.

CCN.com analysis found that five DJIA companies have consensus “hold” ratings, as well as average price targets that imply minimal upside:

dow jones stocks with the worst ratings from Wall Street analysts
These five Dow Jones Industrial Average stocks have “hold” ratings and offer limited upside potential according to their consensus price targets. | Source: CCN.com/TipRanks Data 

The biggest surprise is Walgreens Boots Alliance. Despite a 4% dividend yield and the benefit of coronavirus-related staples stockpiling, WBA failed to earn a “buy” rating from any of the nine analysts covering it.

But none of them gave it a “sell” rating either, which explains why the consensus price target implies 6.6% upside from Wednesday’s close near $45.

walgreens stock, dow 30
Despite watching it fall more than 20% in 2020, not a single Wall Street analyst believes Walgreens stock is a buy. | Source: Yahoo Finance 

Much less unexpected was Exxon Mobil, whose 1% upside ranked dead-last among DJIA components. Though well off its lows, XOM stock is down more than 30% in 2020, and some analysts believe that its attractive 7% dividend is at risk following a historic rout in crude oil prices.

The most polarizing stock on the list is Caterpillar, which received a buy rating from 40% of analysts and a sell rating from 27% of them.

Caterpillar has long been considered a bellwether for global growth  due to its position in the manufacturing supply chain. So this divided outlook is in some ways a proxy for arguments about what shape the economic recovery is going to take. Price targets on CAT ranged as high as $150 and as low as $80.

Rounding out the Dow Jones dog house are 3M and Travelers, which had “buy” recommendations from just 33.3% and 18.8% of analysts, respectively.

These DJIA Companies Have the Boldest Consensus Buy Ratings

The silver lining for investors is that Wall Street believes all of these stocks offer some upside, however minimal it may be. But analysts see much more potential in other Dow Jones components .

According to CNBC, the consensus price target on Merck implies more than 18% worth of upside, making it the most attractive play in the index.

merck stock, dow jones industrial average
After falling more than 10% year-to-date, Wall Street sees Merck stock rising an average of more than 18% in the near future. | Source: Yahoo Finance 

Disney, Visa, Goldman Sachs, Raytheon Technologies, Procter & Gamble, and UnitedHealth Group are other stocks that Wall Street expects to rise at least 10% in the near-term.

The safest investment is tech giant Microsoft, which is recommended by more than 80% of analysts. But there’s a trade-off. Its ~9% upside lags many of its peers.

Disclosure: The author owns Exxon Mobil stock.