Finance

These Two Dow Jones Stocks Set to Soar in 2024 and Beyond


When investors think about stocks Dow Jones Industrial Average, some may argue that the index contains more than its share of boring industrial companies, is unlikely to generate returns beyond nominal returns, and ignores its constituents.But in recent years, the parent company of the Dow Jones Industrial Average S&P Global Replacing old economy companies, e.g. Alcoa and General Electric The stocks in the index are more dynamic and more representative of the new economy.

This still-relevant index still has some stocks with the potential for big gains.Two Dow components that are still relevant are Amazon (NASDAQ: AMZN) and Nike (NYSE:NKE)Let’s learn more about these two stocks and why they’re set to soar in 2024 and beyond.

1. Amazon

Most people know Amazon best for its e-commerce website and various Prime subscription services. But its potential as a growth stock lies primarily in its Amazon Web Services (AWS) unit. As a cloud provider, AWS plays a vital role in supporting third-party services. – Various party applications and services, including those powered by artificial intelligence (AI).

AWS has long been the largest cloud provider, and it hopes to use that leadership to enable an “all-end” approach to artificial intelligence. This means building custom chips, writing software layers, training models, and providing a simple front end to easily connect to various AI services.

Cloud infrastructure market share by company, Q4 2023.

Image source: Collaborative Research Group.

By 2023, only 16% of companies income from AWS.But at the same time, it offers two-thirds of Amazon’s products operating income that year.

The company’s other businesses include fast-growing businesses such as advertising, subscriptions and third-party seller services. The largest business is online sales, but it is also the slowest-growing business with the narrowest profit margins.

Still, Amazon can grow rapidly despite its already massive $1.8 trillion market capitalization due to its diverse market segments. Analysts predict net profit will grow 44% this year and 26% in 2025. Furthermore, on a forward P/E basis (the company has a P/E ratio of 42), investors can benefit from Amazon’s AI-driven growth without having to pay a huge premium.

2. Nike

Nike has accomplished the seemingly impossible in the consumer world: It has established a competitive advantage in the sportswear and equipment business. In addition to having one of the most recognized brands in the world, its well-managed global supply chain allows it to reduce production costs while building a global brand. Additionally, Nike invests heavily in research and development, innovating in their respective areas of expertise, and in marketing and maintaining a sizeable social media presence.

A huge marketing investment is celebrity endorsements by popular athletes in multiple sports. While all the attention is focused on active athletes, the strategy also works for retired athletes (perhaps the best example of this strategy is the enduring popularity of the Jordan Brand beyond the two-year-old Michael Jordan NBA retirement decades back).

Unfortunately for Nike, the company’s results have suffered in recent quarters due to the economic downturn. In the first six months of fiscal year 2024 (ending November 30, 2023), net profit was slightly more than $3 billion, an 8% increase from the same period last year.

The stock has struggled to gain traction since reaching pandemic-driven highs in late 2021. The stock currently trades at a 45% discount from that high.

However, it may come back. Refreshing its more popular brands in the spring and the upcoming Summer Olympics could be a marketing win for the company.

Additionally, analysts expect profits to grow 18% next year. That growth could erase the impact of a forward price-to-earnings ratio of 28 times and trigger a long-awaited rebound in Nike stock.

Should you invest $1,000 in Amazon right now?

Before buying Amazon stock, consider the following factors:

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John Mackey is the former CEO of Amazon subsidiary Whole Foods Market and a board member of The Motley Fool. Will Healy There are no positions in any stocks mentioned. The Motley Fool owns and recommends Amazon, Nike and S&P Global. The Motley Fool recommends the following options: Buy long $47.50 calls on Nike in January 2025. The Motley Fool has options. Available at Motley Fool. disclosure policy.

These Two Dow Jones Stocks Set to Soar in 2024 and Beyond Originally published by The Motley Fool



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