3 Dow Stocks With Double-Digit Return YTD Despite Coronavirus


Wall Street's new bull market that started in mid-April, ending the coronavirus-induced short bear-market, has regained pace this week after a disappointing last week. The market suffered a turmoil last week on concerns about the resurgence of coronavirus cases in several states.

However, markets have stabilized this week as it looks very clear that the United States is not going to re-impose lockdowns despite a spike in coronavirus infections in some states. Moreover, several major economies like Italy, Spain, Japan, South Korea, China, India and Singapore have witnessed a rise in cases as these economies started reopening. Notably, none of those countries have decided to re-impose lockdowns again.

Dow's Impressive Rally Continues

The Dow recorded its all-time high of 29,568.57 on Feb 12. However, the index entered into the bear market on Mar 11 with the outbreak of the deadly coronavirus globally. The downward movement continued till Mar 23 as almost all countries, including the United States imposed partial or total lockdowns.

However, the blue-chip index's northbound journey began on Mar 24 and is continuing barring occasional fluctuations. The index jumped an astonishing 51.4% during Mar 23 to Jun 8. After Jun 8, the index suffered a temporary setback in the last week on fear of the second wave of the coronavirus and lost more than 6% last week. Meanwhile, the index has recovered impressively this week. Currently the Dow is 8.6% away from becoming positive year to date.

3 Dow Stocks Flying High 

Only five stocks out of the 30-stocks blue-chip index are currently in green year to date. Of the five, only three stocks have witnessed a double-digit rally so far in 2020. All three stocks carry a Zacks Rank #3 (Hold).

The chart below shows the price performance of three stocks year to date.

Apple Inc.'s (AAPL) Services and Wearables businesses are expected to drive top-line growth in fiscal 2020 and beyond. Although Apple’s business primarily runs around its flagship iPhone, the Services portfolio has emerged as its new cash cow.

The company is encouraging developers to use artificial intelligence (AI) and machine learning in their apps. Apple’s focus on autonomous vehicles and augmented virtual reality technologies presents growth opportunity in the long haul.

The company has an expected earnings growth rate of 3.6% for the current year (ending September 2020). The Zacks Consensus Estimate for current-year earnings has improved by 0.1% over the last 30 days. The stock price has jumped 19.7% year to date.

Microsoft Corp. (MSFT) has a dominant position in the desktop PC market, with its operating systems being used in the majority of PCs worldwide. The company has doubled down on the cloud computing opportunity. It is one of the three largest providers of gaming hardware. Its Xbox console was one of the first gaming devices of its kind.

Microsoft also offers a hybrid cloud solution that enables the integration of existing IT infrastructure with the public cloud. The company is also pursuing growth in the SMB segment through partnerships with infrastructure providers such as GoDaddy.

The company has an expected earnings growth rate of 9.2% for the current fiscal (ending June 2021). The Zacks Consensus Estimate for current-year earnings has improved by 0.2% over the last 30 days. The stock has soared 24.4% year to date.

The Home Depot Inc. (HD) is the world’s largest home improvement specialty retailer with over 2,200 retail stores across the globe, offering a diverse range of branded and proprietary home improvement items, building materials, lawn and garden products, and related services. It primarily serves home owners and professional renovators/remodelers, general contractors, handymen, property managers and building service contractors.

The company’s expected earnings growth rate for the current year is negative 3.4% (ending January 2021). However, it has positive expected earnings growth rate of 11.6% for next year. The Zacks Consensus Estimate for the current and next year has improved by 0.4% and 0.6%, respectively, over the last 7 days. The stock has climbed 14% year to date.

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