While the Dow Jones (^DJI) represents industry leaders, not every stock in the index is a safe bet. Some are facing headwinds like declining demand, rising costs, or disruptive new competitors.
Finding the best companies in the Dow Jones isn’t always straightforward, and that’s why we started StockStory. Keeping that in mind, here are three Dow Jones stocks that don’t make the cut and some better choices instead.
Home Depot (HD)
Market Cap: $411.3 billion
Founded and headquartered in Atlanta, Georgia, Home Depot (NYSE: HD) is a home improvement retailer that sells everything from tools to building materials to appliances.
Why Does HD Give Us Pause?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Estimated sales growth of 1.4% for the next 12 months implies demand will slow from its six-year trend
- Free cash flow margin shrank by 2.4 percentage points over the last year, suggesting the company is consuming more capital to stay competitive
At $414.02 per share, Home Depot trades at 26.3x forward P/E. Dive into our free research report to see why there are better opportunities than HD.
Disney (DIS)
Market Cap: $208.2 billion
Founded by brothers Walt and Roy, Disney (NYSE: DIS) is a multinational entertainment conglomerate, renowned for its theme parks, movies, television networks, and merchandise.
Why Do We Pass on DIS?
- Annual sales growth of 3.8% over the last two years lagged behind its consumer discretionary peers as its large revenue base made it difficult to generate incremental demand
- Projected 4 percentage point decline in its free cash flow margin next year reflects the company’s plans to increase its investments to defend its market position
- Underwhelming 6.6% return on capital reflects management’s difficulties in finding profitable growth opportunities
Disney is trading at $115.98 per share, or 19.3x forward P/E. Read our free research report to see why you should think twice about including DIS in your portfolio.
Nike (NKE)
Market Cap: $109.7 billion
Originally selling Japanese Onitsuka Tiger sneakers as Blue Ribbon Sports, Nike (NYSE: NKE) is a global titan in athletic footwear, apparel, equipment, and accessories.
Why Are We Out on NKE?
- Constant currency growth was below our standards over the past two years, suggesting it might need to invest in product improvements to get back on track
- Sales are expected to decline once again over the next 12 months as it continues working through a challenging demand environment
- Shrinking returns on capital suggest that increasing competition is eating into the company’s profitability
Nike’s stock price of $74.30 implies a valuation ratio of 43.4x forward P/E. Dive into our free research report to see why there are better opportunities than NKE.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today for free. Find your next big winner with StockStory today. Find your next big winner with StockStory today
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