The 3 Best Dow Jones Stocks of 2022 So Far: Are They Buying Now?

Even bluechip stocks can see a decline. This is evident with the Dow Jones Industrial Average sinking close to 15% of the year so far.

Most of the 30 stocks in the well-known index are in negative territory this year. But not all of them. Here are the three best Dow Jones stocks of 2022 so far — and whether or not they’re good to buy now.

1. Chevron: The Dow’s Only Energy Store

Chevron (CVX -0.40%) ranks as the clear winner among Dow stocks this year. Shares of the oil and gas giant have gained more than 30%. This performance follows an impressive 39% gain in 2021.

In general, energy stocks have delivered solid returns in 2022. Russia’s invasion of Ukraine has played a significant role in boosting the region. This disruption in oil and gas supply coincides with a surge in demand as the global economy emerges from the shadow of the COVID-19 pandemic.

After the Dow Jones booted ExxonMobil in 2020, Chevron was left as the only energy stock in the coveted index. It’s certainly good for the Dow that chevron is still an ingredient. Without it, the index’s year-over-year loss would be worse.

2. Merck: A Big Winner Despite Some Stumbles

Merck (MRK -0.74%) trails Chevron as the Dow’s second-best stock of 2022 so far. Shares of the big drugmaker have risen more than 12% and have jumped 24% year over year so far in July.

In times of market volatility, investors often prefer big pharma stocks. It certainly helped Merck that the company continued strong growth. For example, the drugmaker’s sales grew 28% year over year in the second quarter of 2022. Merck won a major regulatory victory in the US for the pneumococcal vaccine Vaxnuevance as well as four additional European approvals for the cancer immunotherapy Keytruda.

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However, Merck has encountered some stumbling blocks recently. The company announced disappointing results this summer for three late-stage clinical studies evaluating Keytruda. It also appears that Merck’s bid to acquire Cezanne has stalled.

3. Passenger: Hanging on Despite a Turn for the Worse

Travelers (TRV -2.03%) is ranked No. 3 among the best-performing Dow Jones stocks of the year so far. And it managed to do so with a year-over-year profit of less than 5%. This shows how tough 2022 has been for the Dow.

The maximum traveler’s pace came in the first quarter. The property casualty insurer reported strong premium and earnings growth in Q1. CEO Alan Schnitzer even said the company was “off to a great start in 2022.”

That “great start” was marred by high-disaster losses in Q2, though. Passengers also suffered a lot due to its investment. As a result, the company’s net income fell 41% year over year in Q2. But even with this negative turn of events, Travelers stock has remained in positive territory for much of 2022.

Are they buying now?

I suspect all three of these stocks will continue to outperform the overall Dow in the short term. However, I’m not a big fan of long term commuters. The stock is not bad; In my view it is unlikely to give exceptional returns.

What about Merck? Despite some setbacks for Keytruda, I expect the blockbuster drug to drive the company’s revenue and earnings higher. Merck’s vaccines should also be solid growth drivers. I think the stock will do well for at least the next few years, although the patent expiration for Keytruda in 2028 is big.

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I think Chevron is another stock that can outperform the market in the near future. I do not see an immediate end to the uncertainty that is affecting fuel prices. Chevron also offers an exceptionally attractive dividend yield of over 3.6%.

Keith Spites does not hold a position in any of the stocks mentioned. Near The Motley Fool Merck & Co. and Seagen Inc. Has posts and is recommended. The Motley Fool has a disclosure policy.

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