3 Dow Jones Stocks We Avoid

Dow Jones: Not All Blue Chips Are Created Equal

The Dow Jones Industrial Average consists of 30 leading, well-established companies. However, even these industry giants can face challenges such as declining growth, outdated strategies, or mounting competition.

Identifying the top performers within the Dow Jones can be complex. That’s why StockStory was created—to help investors make informed decisions. Below, we highlight three Dow Jones stocks you might want to steer clear of, along with some more promising alternatives.

Disney (DIS)

Market Capitalization: $181.4 billion

Disney (NYSE:DIS), founded by Walt and Roy Disney, is a global leader in entertainment, famous for its theme parks, films, TV networks, and merchandise.

Reasons to Consider Selling Disney Shares:

• Disney’s annual revenue growth of 9.5% over the past five years has trailed behind other consumer discretionary companies, largely due to its already massive sales base, which makes further expansion difficult.
• The company’s operating margin stands at just 14.8%, limiting its ability to invest in innovation or respond effectively to new competitors.
• With a free cash flow margin of only 8.2% over the last two years, Disney has less flexibility to fund new initiatives or return capital to shareholders through buybacks or dividends.

Currently, Disney trades at $102.50 per share, representing a forward P/E ratio of 14.8.

Sherwin-Williams (SHW)

Market Capitalization: $82.64 billion

Sherwin-Williams (NYSE:SHW) is a major player in the paint and coatings industry, manufacturing a wide range of related products.

Why We’re Cautious About Sherwin-Williams:

• Sales have grown by just 1.1% annually over the last two years, lagging behind other industrial companies, as its large size makes it harder to drive additional demand.
• Forecasts indicate a modest 4.2% sales growth over the next year, pointing to continued sluggishness.
• Earnings per share have increased by only 5.2% per year over the past two years, underperforming the industry average.

Sherwin-Williams is priced at $335.78 per share, with a forward P/E of 29.2.

Cisco (CSCO)

Market Capitalization: $316 billion

Established in 1984 by a husband-and-wife team aiming to connect Stanford and UC Berkeley computers, Cisco (NASDAQ:CSCO) develops and sells networking hardware, security solutions, and collaboration tools for businesses worldwide.

Concerns About Cisco:

• Cisco’s vast revenue base makes rapid sales growth difficult; its annual revenue growth of 1.6% over the last two years falls short of expectations for the business services sector.
• Over the past five years, its free cash flow margin has dropped by 5.9 percentage points, reflecting increased spending to maintain its market position.
• Declining returns on capital suggest that the company’s historical profit drivers are losing momentum.

Cisco’s shares are currently valued at $80.06, with a forward P/E of 18.9.

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