If you had a position in Nvidia (NASDAQ:NVDA) after it reported earnings on May 22, you had a great week. If you owned some members of the Dow 30, your week may have looked much different. The stocks that make up the Dow Jones Industrial Average (DJIA) declined sharply last week. Some of these stocks may present a buying opportunity. In other cases, these are Dow stocks to sell.
Dow stocks have large market capitalizations that put them in the category of blue-chip stocks. Many investors carry one or more of these stocks in their portfolio because they outperform the market during bear markets. And, even though they lag behind growth stocks in bull markets, investors will generally get income from a stable, growing dividend.
That means that many of these falling Dow stocks will be solid buy-the-dip candidates. But that’s not the case for all of them. Here are three Dow stocks to sell based on the headwinds listed below.
Boeing (BA)
It’s almost too easy to put Boeing (NYSE:BA) on a list of Dow stocks to sell. But too easy doesn’t mean it’s unfair.
It seems that the company is facing new (and bad) news nearly every week. Boeing has already announced that it will have a new Chief Executive Officer (CEO) next year. But, that’s failing to stop the drop in BA stock which is down near a 52-week low.
The company has requested $60 billion in federal assistance. It seems unlikely that the federal government will try to force a company as important to our aerospace and defense industry as Boeing into bankruptcy. However, an analyst for Bank of America (NYSE:BAC) suggests that some form of a modified bailout could be in order. Not surprisingly, the same analyst has a $135 price target on BA stock which would drop the stock near five-year lows.
That’s an outlier from other analysts who have a consensus upside of 20% for Boeing. However, the company now says second quarter orders won’t show strong growth. Further, the company will have a net cash burn in 2024, making BA stock one to avoid.
Nike (NKE)
Nike (NYSE:NKE) stock is down 15.4% in 2024 and is trading near its 52-week low. Based purely on technical analysis, the stock does look to be at a solid level of support around $91.
However, Nike is on this list of Dow stocks to sell because of slowing growth. It appears that inflation and higher interest rates are weighing on consumers, particularly in a hyper-competitive market like athleisure and footwear.
The two specific issues that Nike is working hard to address are innovation and the speed at which they bring those innovation to market. The company expects the Olympic games in Paris to be a significant catalyst this summer.
That’s likely the reason that analysts have a consensus buy rating on NKE stock with a price target that forecasts 20% upside. However, before you think of buying that dip, consider that Nike is guiding to low single-digit growth for the first half of its 2025 fiscal year which begins in June 2024.
When you put it all together, NKE stock may be worth taking a look at later this year, particularly if interest rates tick lower. But, it’s hard to see the company’s fourth quarter earnings showing significant acceleration in growth. And the dividend isn’t large enough to attract new investors.
Travelers Companies (TRV)
Unlike the other two stocks on this list, Travelers Companies (NYSE:TRV) is having a solid year. TRV stock is up 23.8% in the last 12 months and 11.9% in 2024.
However, expectations of past history will be an accurate reflection of future results. In this case, companies that have to increase their insurance rates generally make attractive stock targets.
The problem is that Travelers Companies is already facing higher claims from strong summer storms that have moved throughout the country. In its last earnings report, it reported that catastrophe-related expenses were up 33% to $712 million.
And that’s before the hurricane season kicks off at the beginning of June. It’s expected to be one of the most active seasons on record. That means more claims and losses are to be expected. Investors should look at TRV’s most recent performance, which is down 3% in the last three months. And, that would be a better barometer of the likely performance in the second half.
On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.