3 Dow Stocks That Could Soar
While declaring that $HD and $V (who have posted total returns of around 500% over the last decade) are poised to soar in 2023 is far from bold, sometimes it's best not to overthink things.

Meanwhile, saying I like $MMM feels uncomfortably bold. Facing an unbelievable amount of litigation -- considering it was initially famous for Post-it notes -- the company is being priced for no growth.


Ultimately, I think all three are interesting at today's prices -- here's a short thesis for each:

  • Home Depot - X-factor stock with dividend payments up and to the right (534% growth in the L10Y) and shares outstanding down and to the right (31% lower L10Y), with a high and rising ROIC (16% to 42% L10Y). Near 50-50 split between Pro and DIY segments provide stability regardless of the housing environment. Not the worst place to look at 19x earnings.
  • 3M - Setting aside litigation surrounding 3M's use of "forever chemicals" and its subsidiary, Aearo's legal issues -- the company has averaged $5B in FCF the last few years. While we wait for these issues to be resolved, 3M will pay a near 5% dividend (which remains easily covered by FCF) and continue to lower its share count (down 20% L10Y). However, at just 13 times operating cash flow, it is trading near its most attractive valuation of the last decade.
  • Visa - Not much to say here. X-factor stock like HD with dividends up 445% L10Y and share count down 19% over the same time. With a ROIC of 26%, a small but quickly growing 0.7% dividend, and a network effect to end all network effects, Visa makes for a tremendous steady-Eddie pick at 25x FCF.

Are there any stocks you love or hate from this group?

Or do you have a better Dow pick set to soar?
Which stock posts the best total return through 2030?
40%Home Depot
3%3M
55%Visa
27 VotesPoll ended on: 1/13/2023
Christian's avatar
Absolutely love Visa from this group @ifb_podcast
Josh Kohn-Lindquist's avatar
@christian7621 for sure 👍

Im not going to slow my additions until something really terrifying comes along to challenge their moat. 😂
I’m not creative enough of a thinker to see it yet though.
MAPsignals's avatar
Happy holder of HD and V
Josh Kohn-Lindquist's avatar
@mapsignals Great buy-and-forget about stocks. I hold $V and $MA together as a combined core holding and should probably do the same with $HD and $LOW, rather than focusing on just Lowe’s.
Ben's avatar
Poor $MMM didn’t have a chance
Josh Kohn-Lindquist's avatar
@rpinvestments And that’s exactly what makes them kind of interesting to me. 😂
Conor's avatar
All three are great choices.

If you take price out of the equation I would rank them: 1. $V 2. $HD 3. $MMM

I voted for $MMM 3M since I am a value investor and 3M is the "best deal" in my opinion at today's prices. I wouldn't buy 3M in my own portfolio, but I would rather wait for the $HD or $V price to come down.

It's not a disavowment of 3M. I just think you can find better stocks at a similar valuation right now. Think $DIS Disney.
Josh Kohn-Lindquist's avatar
@conorvalue Absoluetly -- I would tend to agree with that price-agnostic ranking of yours.

That is a very interesting comparison to Disney, too. Probably a higher risk-reward ratio coming from them versus 3M, so that would be an interesting selection as well.

Especially if they build upon the CEO returning and stick the landing on its streaming operations.
Jensen Butler's avatar
Tough one! 3 behemoths that are all long term holds imo. If I had to choose one I’d go with $HD. Even with housing uncertainties and anticipation of people holding off large expenses, I don’t think a strong enough case to broad-stroke write this Dad-playground off as a lagger during possible recession times. From a direct competitor standpoint, I’d go Home Depot over Lowe’s
Josh Kohn-Lindquist's avatar
@jensen Agree 💯 there.

I have Lowe's as a core holding over Home Depot simply because its market cap is only 1/3 that of HD's and I'm banking on a gradual turnaround. Just juices the total return potential, especially considering Lowe's strong buybacks too.

But I do often think this might be kind of foolish not to just buy the better operator, even though I think both are great to own. So maybe I need another dual core holding position, like I have with Visa and Mastercard together.
Jensen Butler's avatar
@joryko yea not a bad idea. I know I would spend mental energy on wondering if I made the right pick if I only owned Visa or MasterCard. I think wise to own both for this case and their line of business

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