The Dow Jones (^DJI) is home to corporate giants, but size alone doesn’t guarantee success. A few of these companies are struggling with weak fundamentals, paradigm shifts, or poor execution.
Just because a company is in the Dow Jones doesn’t mean it’s a great investment, and StockStory is here to help you separate winners from laggards. Keeping that in mind, here are two Dow Jones stocks that will likely remain market leaders and one best left off your watchlist.
Market Cap: $886 billion
Tracing its roots back to 1799 when its earliest predecessor was founded by Aaron Burr, JPMorgan Chase (NYSE:JPM) is a leading financial services company offering investment banking, consumer banking, commercial banking, and asset management services globally.
Why Are We Cautious About JPM?
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Scale is a double-edged sword because it limits the company’s growth potential compared to its smaller competitors, as reflected in its below-average annual revenue increases of 7.5% for the last two years
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Inferior net interest margin of 2.6% means it must compensate for lower profitability through increased loan originations
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Estimated tangible book value per share growth of 7.4% for the next 12 months implies profitability will slow from its two-year trend
JPMorgan Chase’s stock price of $325.38 implies a valuation ratio of 2.5x forward P/B. Dive into our free research report to see why there are better opportunities than JPM.
Market Cap: $2.42 trillion
Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ:AMZN) is the world’s largest online retailer and provider of cloud computing services.
Why Could AMZN Be a Winner?
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Amazon revolutionized the way consumers shop. This isn’t the only tailwind to its impressive revenue growth, as its highly profitable AWS segment has also driven top-line momentum.
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The company’s best-in-class revenue growth coupled with modest operating leverage on its past infrastructure investments has led to elite EPS growth over a multi-year period.
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Though dominant, Amazon’s capital-intensive e-commerce business means its profitability is structurally lower than its pure-play tech peers. Can the company pull it up, or are we reaching a ceiling?
Amazon is trading at $226.64 per share, or 31x forward price-to-earnings. Is now a good time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members.
Market Cap: $256.8 billion
Recognizable by its iconic green logo and the slogan “Don’t leave home without it,” American Express (NYSE:AXP) is a global payments company that issues credit and charge cards, processes merchant transactions, and offers travel and lifestyle benefits to consumers and businesses.