The Dow Jones Industrial Average (DJIA) has had an outstanding year, and it marched even higher recently as two huge components, Caterpillar and 3M, posted stellar third-quarter results. For years, many investors yawned at the venerable index, but many have taken note now as the large cap companies that make up the index are very liquid and profitable and have posted solid results.
Not every company in the Dow has had a great year. We screened the 30 companies that make up the index and found five that are still down for 2017 but are rated Buy at Merrill Lynch. Investors looking for value and quality in a pricey market may want to check out these five.
This integrated giant is a safer way for investors looking to stay or get long the energy sector, and it has big Permian Basin exposure. Chevron Corp. (NYSE: CVX) is a U.S.-based integrated oil and gas company with worldwide operations in exploration and production, refining and marketing, transportation and petrochemicals.
The company sports a sizable dividend and has a solid place in the sector when it comes to natural gas and liquefied natural gas (LNG). Some on Wall Street estimate the company will have a compound annual growth rate of over 5% for the next five years.
The company reported solid earnings for the third quarter, and analysts have noted that the Permian Basin remains a key source of capital flexibility, and it is a key issue behind their relative preference for Chevron versus some of the other majors.
Chevron shareholders are paid an outstanding 3.78% dividend. The Merrill Lynch price target for the stock is $125, and the Wall Street consensus price objective is $122.57. The shares closed Monday at $114.39.
This top consumer media company has multiple streams of income to push revenue. Walt Disney Co. (NYSE: DIS) stock continues outperforming on a near-term and long-term basis. With the movie studio business poised to improve, as with accelerating theme park business, the network programming continues to drive viewership with extensive sports programming. Combining that revenue growth with the company’s solid media networks and interactive presence, and the 2017 and 2018 revenue estimates could be conservative.
The Disney Media Networks segment operates broadcast and cable television networks, domestic television stations and radio networks and stations, and it is involved in the television production and television distribution operations. Its cable networks include ESPN, Disney Channels and ABC Family, as well as UTV/Bindass and Hungama. This segment also owns eight domestic television stations. Disney is also one of 24/7 Wall St.’s top 10 stocks to own for the next decade.
Disney shareholders are paid a 1.59% dividend. Merrill Lynch has a $120 price target for the shares, and the posted consensus price objective is $110.32. The stock closed trading Monday at $98.04 per share.