Impressive corporate earnings, economic growth, and an improving job market drove the Dow Jones Industrial Average (DJIA) to its record-high of 35,625.40 on August 16, 2021. However, the index struggled to maintain its momentum in September. Investors are concerned over the resurgence of COVID-19 cases, struggles over the U.S. debt ceiling, the Federal Reserve’s decision to resume tapering and a high inflation projection.
This has caused massive market volatility in September, with DJIA witnessing its worst monthly decline in 2021. Although the DJIA declined 4.9% in September, major members of the index, JPMorgan Chase & Co. (JPM), Chevron Corporation (CVX), McDonald’s Corporation (MCD), American Express Company (AXP), and The Boeing Company (BA), have delivered positive returns.
This is owed to their strong fundamentals. As the market is expected to remain volatile this month as well, it could be wise to add these best-performing DJIA stocks to your watchlist.
JPMorgan Chase & Co. (JPM)
JPM provides financial services and retail banking to business enterprises, institutions, and individuals worldwide. The company operates through four segments ─ Consumer & Community Banking (CCB); Corporate & Investment Bank (CIB); Commercial Banking (CB); and Asset & Wealth Management (AWM). It also provides ATM, online and mobile, and telephone banking services.
On September 21, 2021, JPM launched its new digital bank in the U.K. under the Chase brand, the largest consumer bank in the U.S. Chase will introduce a fee-free current account that combines money management features with cash back rewards for everyday debit card spending. With the help of the Chase app and its 24*7 customer support, the company will offer a range of features to help people budget and manage money.
In an announcement dated September 16, 2021, JPM will power payments made by U.S. credit cards on Alibaba.com, the B2B business unit of Alibaba Group (BABA). The need for a quick, easy, and safe payment method amid rising e-commerce activities will enable JPM’s JP Morgan Merchant Services and BABA’s digital life services platform, Alipay, to help small and medium-sized businesses transform digitally and better connect with suppliers worldwide.
For its fiscal second quarter that ended June 30, 2021, JPM’s net income came in at $11.95 billion, representing a 154.9% year-over-year rise. The company’s return on equity came in at 18% for the quarter, up 1.57 million basis points from the prior-year period.
Analysts expect JPM’s EPS to improve 58.3% year-over-year in the current year to $14.06. The consensus revenue estimate of $122.95 billion for the current year represents a marginal improvement year-over-year. It surpassed the consensus EPS estimates in each of the trailing four quarters. Analysts expect the stock’s EPS to grow at an 8.3% rate per annum over the next five years.
The stock has gained 72.4% over the past year and 2% in September. It closed Friday’s trading session at $167.13. The average analyst price target of $167.80 represents a marginal upside potential.
Chevron Corporation (CVX)
CVX provides administrative, financial, management, and technology support for companies engaged in integrated energy, chemicals, and petroleum operations worldwide. Operating in Upstream and Downstream business segments, the company produces and transports crude oil and natural gas.
On October 1, 2021, CVX’s Chevron U.S.A. Inc. subsidiary closed the acquisition of an equity interest in American Natural Gas LLC and its network of 60 compressed natural gas stations across the United States from Mercuria Energy Trading, one of the world’s largest integrated energy and commodities companies. This joint venture will allow CVX to grow its renewable natural gas value chain rapidly, complementing its previously announced plan to open more than 30 Chevron-branded CNG stations by 2025.
On September 9, 2021, CVX’s Chevron U.S.A. Inc. subsidiary and Gevo, Inc. (GEVO) announced a letter of intent to jointly invest in building and operating new facilities that would process inedible corn to produce sustainable aviation fuel. This enables CVX and GEVO to help their customers lower the lifecycle carbon intensity of fuels used in the aviation industry.
CVX’s total revenues for its fiscal second quarter, that ended June 30, 2021, increased 178.6% year-over-year to $37.60 billion. The company’s pre-tax income came in at $4.42 billion for the quarter, versus a $10.60 billion loss in the year-ago period. CVX’s adjusted earnings came in at $3.27 billion, compared to a $2.92 billion loss in the prior-year period. Its adjusted EPS was $1.71, versus a $1.56 loss per share in the year-ago period. The company had $7.53 billion in cash and cash equivalents as of June 30, 2021.
CVX’s EPS is estimated to rise 3485% year-over-year to $6.77 in the current year. It surpassed Street revenue estimates in three of the trailing four quarters. Analysts expect its revenue to be $149.27 billion for the current year, representing a 57.6% year-over-year improvement.
The stock has gained 48.2% over the past year and 3.1% in September. It closed Friday’s trading session at $104.33. The average analyst price target of $123.36 represents an 18.2% potential upside.
McDonald’s Corporation (MCD)
MCD operates and franchises McDonald’s restaurants worldwide. They mainly serve locally relevant menus of fast food, soft drinks, and beverages. The company operates through three segments—U.S.; International Operated Markets; and International Developmental Licensed Markets. As of December 31, 2020, the company operated 39,198 restaurants.
On August 4, 2021, MCD and eBay Inc. (EBAY) announced agreements with Lightsource BP, a leading solar developer, to purchase power from the Ventress Solar project, Louisiana’s largest solar project. The 345-megawatt Solar project will help MCD and EBAY meet their sustainability goals and advance their commitment to climate action while expanding Lightsource bp’s footprint of solar assets across the Southeast.
In a Wall Street conference held on June 2, 2021, MCD’s CEO disclosed the company’s testing of automated drive-thru ordering using artificial intelligence software at 10 MCD restaurants in Chicago. Achieving approximately 85% order accuracy using voice-ordering technology, the company hopes it will help offset rising wage demands and worker shortages and improve customer experience.
For its fiscal second quarter that ended June 30, 2021, MCD’s total revenues increased 56.5% year-over-year to $5.89 billion. The company’s operating income came in at $2.69 billion, up 180% from the prior-year period. MCD’s net income came in at $2.22 billion for the quarter, representing a 358.7% rise from the year-ago period. Its non-GAAP EPS increased 259.1% year-over-year to $2.37.
Analysts expect the stock’s EPS to improve 50.1% year-over-year to $9.08 in the current year. The consensus revenue estimate of $22.98 billion for the current year indicates a 19.6% rise from the prior-year period. MCD surpassed the consensus EPS estimates in three of the trailing four quarters. MCD’s EPS is expected to grow at a rate of 20.4% per annum over the next five years.
MCD has gained 10.6% over the past year and 1.9% in September. It ended Friday’s trading session at $242.93. The average price target of $267.87 for the stock represents a potential 10.3% upside.
American Express Company (AXP)
AXP is a multinational financial services company that provides charge and credit payment card products and travel-related services to consumers and businesses worldwide. Its products and services also include merchant acquisition and processing, point-of-sale marketing, fraud prevention services, and the design and operation of customer loyalty programs.
On September 16, 2021, AXP’s joint venture in China, Express Technology Service Co., Ltd., partnered with China Industrial Bank to introduce two American Express-branded debit cards, the first debit product to support renminbi transactions on the American Express network. China Merchants Bank, China CITIC Bank, and China Guangfa Bank will also launch American Express-branded debit products in the coming months. This will enable AXP to expand its range of services and increase its global reach.
On July 01, 2021, AXP launched a refreshed U.S. American Express Consumer Platinum Card offers even more value to cardmembers with additional and expanded travel and everyday benefits and services across dining, wellness, retail, and entertainment. The company expects more customers to enroll in Platinum membership in the coming months.
For its fiscal second quarter, that ended June 30, 2021, AXP’s total revenues increased 33.5% year-over-year to $10.24 billion. The company’s pre-tax income came in at $5.93 billion for the quarter, up 452.4% from the prior-year period. While its net income increased 787.2% year-over-year to $2.28 billion, its EPS increased 865.5% to $2.80.
The consensus EPS estimate of $8.83 for the current year represents a 134.2% year-over-year improvement. It surpassed Street EPS estimates in three of the trailing four quarters. Analysts expect AXP’s revenue to improve 13.4% year-over-year to $40.92 billion. Its EPS is expected to grow at a 41% rate per annum over the next five years.
The stock has gained 71.6% over the past year and 2% in September. It closed Friday’s trading session at $173.94. Wall Street analysts expect AXP to hit $180.50 in the near term, which indicates a potential 3.8% upside.
The Boeing Company (BA)
BA designs, manufactures, and sells commercial jetliners, military aircraft, satellites, missile defense systems, human space flight, and launch systems and services worldwide. The company operates through four segments — Commercial Airplanes (BCA); Defense, Space & Security (BDS); Global Services (BGS); and Boeing Capital (BCC).
On September 29, 2021, BA was awarded a $23.80 billion follow-on contract by the U.S. Department of Defense to continue providing its C-17 Globemaster III fleet over the next ten years. Besides performing critical sustainment activities for the fleet, BA is looking forward to applying digital tools and analytics to drive predictability and performance into every C-17 mission and reduce support costs.
On September 28, 2021, BA was awarded a production contract for five P-8A Poseidon aircraft by the U.S. Navy for Germany. The P-8 will ensure the German Navy’s ability to perform long-range maritime surveillance missions and will play a pivotal role by leveraging existing infrastructure in Europe and full interoperability with NATO’s most advanced assets. This contract will enable BA to expand its footprint.
For its fiscal second quarter that ended June 30, 2021, BA’s total revenues increased 44% year-over-year to $17 billion. The company’s non-GAAP operating earnings came in at $1.02 billion, compared to a loss of $2.96 billion in the prior-year period. Its net earnings came in at $567 million versus a $2.40 billion loss per share in the prior-year period. Its non-GAAP EPS came in at $0.40, compared to a loss of $4.79 in the prior-year period.
BA’s revenue is estimated to rise 27.4% year-over-year to $74.10 billion in the current year. Its EPS is expected to grow at a 20.2% rate per annum over the next five years.
BA has gained 34.6% over the past year and 1% in September. It ended Friday’s trading session at $226. The average analyst price target of $275.25 represents a 21.8% potential upside.
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JPM shares were trading at $166.74 per share on Monday afternoon, down $0.39 (-0.23%). Year-to-date, JPM has gained 33.71%, versus a 15.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
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