The Canine Conundrum: Investing in Dow Leaders and the Debate Over Selling

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By Ronald Tech

  • Don’t get rid of the winners just yet, Dog lovers.
  • Let the champs run wild for maximum returns.
  • These top performers might still have plenty of gas left in the tank.

The Dogs of the Dow strategy has been making waves lately. As the year comes to an end, the theory suggests that this year’s underdogs will emerge as next year’s champions, a trend that often holds true. The strategy offers value and high yield, with Walgreens Boots Alliance Inc (NASDAQ:WBA) serving as a prime example. While it may have been the worst-performing Dow stock in 2023, experiencing a 30% decline year-on-year, it is now trading at a steep discount and yielding over 7%. This combination of value and yield make it an attractive prospect. Furthermore, with a new CEO at the helm, a potential sale of Boots, and the promise of a turnaround, it presents a potential, albeit speculative, opportunity for income-seeking investors.

However, when it comes to this year’s Dow winners, should they be offloaded? Stocks such as Salesforce.com (NYSE:CRM) and Intel (NASDAQ:INTC) have witnessed gains of around 100% in comparison to last year, while others like Microsoft (NASDAQ:MSFT) and Apple (NASDAQ:AAPL) have seen a solid 50% surge, making them tempting targets for profit-taking. Yet, besides some profit-taking, the answer is a resounding no. It is a common saying in the market to “let your profits run,” which prevents traders and investors from pulling out prematurely.

Salesforce.com: Surging Ahead with 100% Gain in 2023

Salesforce.com has monumental momentum propelling it forward in 2024. As the leader in customer engagement, management, and retention, the company is expanding its reach by acquiring new customers, deepening its service offerings, and increasing subscription prices. These factors are expected to drive an 11% revenue growth, with margins expected to widen. Analysts have consistently revised their estimates upwards throughout 2023, and the consensus has not yet caught up with the actual growth. In terms of stock price outlook, Salesforce.com ranks as the #3 Most Upgraded Stock on the Marketbeat.com platform for 2023. Recent upgrades suggest a potential 35% upside. A figure that stands out as an impressive indicator of its prospective growth.

Salesforce Chart

Intel: Gaining Ground on the Upswing

Intel has made significant progress with its turnaround efforts during the year. The company is poised to benefit from the resurgence of the PC market, the growth of data centers, and advancements in AI in 2024. These factors could potentially drive the company’s stock to reach its all-time high levels. Despite being rated as a Hold, analysts have displayed a notable shift in sentiment, fueling the rebound throughout 2023. Numerous upgrades and increases in price targets have been issued, resulting in a 13% rise in sentiment and price targets over the past three months. Analysts anticipate a 13% revenue growth in the financial year 2024, with profits expected to more than double. Although the stock is currently trading above the consensus estimate at $50.76, recent targets indicate a potential upside of 1000 basis points.

Intel Chart

Microsoft: A Firm 3rd Position with a 56% Surge in 2023

Microsoft may have secured a distant 3rd place with a year-to-date gain nearing 56%, a bit behind Intel’s 90%+, but it still boasts a substantial surge with prospects for even loftier prices. It ranks as another one of the Most Upgraded Stocks for 2023, labeled as a Moderate Buy, with a consensus price target leading the market. Furthermore, it stands at approximately 5% above the recent price action, marking a 30% increase from last year. Recent targets hint at an additional 20% upside, with the possibility of even higher targets. With its solidified position as a leading source for AI infrastructure, cloud, and AI-powered cloud services, it is anticipated to surpass the already robust estimates for 2024. Analysts foresee a 14% revenue growth in 2024 and 2025, coupled with margin expansion.

Microsoft Chart

Apple: Primed for Growth in 2024

Despite facing sluggish sales and mixed results, Apple has marked an approximately 50% surge in 2023 and is likely to climb further in the upcoming year. The company is expected to rejuvenate its growth and expand its margins, showcasing sustained improvements in top and bottom-line results during the financial year 2025. Analyst sentiment and price targets have fluctuated within the past year, yet the overall outcome remains largely unchanged. Out of the 35 analysts tracked by Marketbeat, the stock is rated as a Moderate Buy, with a consensus target aligning closely with its all-time high, while the high target surpasses it by 25%.

Apple Chart
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