During periods of stock market volatility and economic uncertainty, it's reasonable for investors to want to take a more defensive approach with their portfolios. Reliable, dependable and predictable blue-chip stocks with solid balance sheets and profitable businesses can be excellent safe havens during market pullbacks and reward investors with significant long-term upside during economic recoveries.
The 30 stocks in the Dow Jones Industrial Average are among the largest blue-chip companies in the U.S. market. Here are the seven best Dow Jones stocks to buy that have the most upside in the next 12 months, according to Bank of America analysts.
Apple Inc AAPL
Apple is the maker of the iPhone, but it has been shifting its priority to services revenue over device sales in recent years. Analyst Wamsi Mohan says the fiscal 2023 iPhone upgrade cycle will be stronger than average due to the need for greater connectivity to enable AV and VR applications. In addition, he says services revenue growth is boosting margins and could expand the stocks' earnings multiple over time. Apple has also been aggressively returning capital to shareholders via dividends and buybacks.
Bank of America has a Buy rating and a $200 price target for AAPL stock.
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Microsoft Corporation MSFT
Microsoft is the largest software company in the world and is known for its Office professional software suite, Windows operating system and Azure cloud services business. Analyst Brad Sills says Microsoft is well-positioned to generate double-digit annual revenue growth and expand margins over at least the next three years as Azure adoption grows. He is also bullish on cloud-based Office 365 and Microsoft gaming business, which includes Game Pass, Xbox and the recently acquired Activision Blizzard, Inc. ATVI.
Bank of America has a Buy rating and a $365 price target for MSFT stock.
Salesforce Inc CRM
Salesforce provides software-as-a-service Customer Relationship Management software. Sills says Salesforce is well-positioned to continue to gain market share of the massive $129 billion CRM market. Not only does Salesforce have a formidable competitive moat, Sills notes the company currently has a relatively modest 15% market share. The company has more than 150,000 core sales and front office customers and a distribution channel of more than 14,000 personnel. Sills projects at least 17% annual organic sales growth for Salesforce in the years ahead.
Bank of America has a Buy rating and a $250 price target for CRM stock.
UnitedHealth Group Inc UNH
UnitedHealth is the largest managed health care firm in the U.S., providing health plans and health care delivery and optimization services to a wide range of customers. Analyst Kevin Fischbeck says United benefits from scale and diversity advantages, and its Optum unit provides a differentiated growth opportunity. Optum currently represents about 21% of United's overall operating earnings, but Fischbeck projects Optum will represent at least 40% of the company's operating earnings growth moving forward as United continues to grow its revenue per customer.
Bank of America has a Buy rating and a $632 price target for UNH stock.
Walt Disney Co DIS
Walt Disney is the largest public media and entertainment company and the owner of six major global theme parks, the ABC and ESPN TV networks and the Disney+ and Hulu streaming services. Disney has also been the worst-performing stock on this list so far in 2022, down 29.8% year-to-date. However, analyst Jessica Reif Ehrlich says Disney's recent weakness is a long-term buying opportunity ahead of several big quarters of recovery in the theme parks business and a strong slate of upcoming movie and TV releases.
Bank of America has a Buy rating and a $140 price target for DIS stock.
Home Depot Inc HD
Home Depot is one of the largest home improvement retailers in the world. Home Depot benefited from a boom in housing sales and home renovation during the pandemic, but analyst Elizabeth Suzuki says there are several reasons to like the stock in 2022 and beyond. The company recently reported a surprise first-quarter earnings beat and raised its full-year guidance despite extremely difficult comps. Pricing and profit growth have remained strong even amid extremely high lumber prices and inflation in other material costs as well.
Bank of America has a Buy rating and a $392 price target for HD stock.
Walmart Inc WMT
Discount retailer Walmart is limping into the second half of 2022, down 17.5% in the past month alone after a big first-quarter earnings miss. Analyst Robert Ohmes says Walmart's omnichannel transformation will continue to gain momentum and drive sustainable and predictable same-store sales and traffic growth. In addition, he says the company's online sales and U.S. Supercenters make Walmart a differentiated next-generation retailer that is worthy of earnings multiple expansion. Ohmes says the recent weakness in Walmart shares is a buying opportunity for long-term investors.
Bank of America has a Buy rating and a $160 price target for WMT stock.
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