the Dow Jones Industrial Average it has had its ups and downs in recent days, dipping into bearish territory before regaining much of its lost value. It’s an escalation of volatility that has plagued markets over the past year as governments launch policies and programs to curb inflation. Many investors are suffering. If you have the ability to wait out challenging market conditions and have some money available to invest after paying off debt, you can find deals not seen in years on powerful stocks that dominate their industries. house deposit (HD -1.37%), Nike (NKE -3.41%)Y Visa (V 0.49%) they are the major Dow stocks that are incredibly cheap right now.
1. Take advantage of pandemic growth
Many companies are struggling. Companies that demonstrated strong growth amid the pandemic are struggling to keep up, and now have too much inventory and expanded infrastructure they no longer need.
Not Home Depot. This powerhouse continues to grow like-for-like sales (compensation) and posts profit despite tough year-over-year comparisons, inflation and a falling housing market.
How have you achieved this? There are several elements in his successful formula. It is the largest home improvement chain in the US and has scaled faster than its competitors in recent decades, giving it an edge. He has invested heavily in his business over the past few years, starting with an overhaul of his digital channels before the pandemic. That positioned it for superior performance when people stayed home and focused on home improvement projects, and the synergies between brick-and-mortar stores, a powerful digital platform and a strong distribution network worked together to deliver services.
These continue to drive growth in this market. Home Depot has enhanced its multiple channels through enhanced digital features and store redesigns, with a focus on the professional segment. Despite some weakness in seasonal items in the second quarter, other categories were so strong, specifically high-end items, that comparisons beat expectations.
Current economic conditions may still wear on Home Depot, and management expects the second half of 2022 to be more challenging than the first half. But regardless of what happens in the near future, Home Depot is a stellar company with enormous long-term potential.
Home Depot shares are down 32% this year, and the shares are trading at their lowest price-to-earnings ratio in more than a decade outside of the 2020 recession.
HDPE ratio data by YGraphics
2. Turn sportswear into casual wear
Fashion has never been so athletic. That’s partly thanks to Nike, which has become the number one sportswear brand and has been so successful at attracting loyalty that its shoes and apparel are practically a uniform for millennials looking for stylish sportswear.
Nike grew to become the world’s largest sportswear company, with more revenue in the past 12 months than Adidas, under armor, Lululemon AthleticaY Skechers set.
NKE Revenue (TTM) data by YGraphics
That gives it enormous leverage as it tries to grow amid global economic pressure. Revenue fell 1% in the fourth fiscal quarter of 2022 (ended May 31), but increased 3% on a currency-neutral basis. The strength was in the Nike Direct channel, which encompasses its direct-to-consumer (DTC) networks, with sales up 7%, while wholesale sales declined. That has become a pattern, with Nike Direct continuing to be a strong piece of the company’s operating model. It has fed off of that by building out its digital DTC services and cutting some wholesale channels.
Nike first told investors about the upcoming challenges more than a year ago, and this year it has struggled with rising costs and inventory. But Nike is well positioned to stay strong and move forward when the economic pressure eases. There are a lot of general tailwinds that should propel your business going forward.
On the fourth-quarter earnings call, CEO John Donahoe mentioned what he called the “expanded definition of sport” in addition to changes toward health, wellness and comfort. That, combined with Nike’s digital strength, size and powerful portfolio of brands, gives it an edge in any market.
Shares of Nike are down 41% this year, with the shares trading at 26 times earnings over the past 12 months, their lowest valuation in nearly five years.
3. More than an indicator of the economy
There are two general reasons why Visa is a solid stock to own. One is that it broadly follows the economy. When the economy is doing well, Visa works well. When the economy is down, Visa’s performance often suffers. That’s good for Visa and its shareholders because the economy is doing well most of the time. The other side of the coin is that when spending drops, Visa feels the pinch.
However, despite the macroeconomic uncertainty, Visa’s business has prospered since recovering from the pandemic. It’s still feeling the uptick, with strong spending outpacing inflation and adding to Visa’s revenue and income.
Income V (TTM) data by YGraphics
The second reason Visa is a compelling stock to own is that it is highly profitable. It’s an asset-light business with ample margins, so there’s not too much concern about whether this company will remain viable. It has a very simple operating model in processing credit card transactions, and its network is large enough to provide a strong moat for your business. However, he is not sitting still and relying on it. It has developed a large fintech backbone, buying or partnering with many companies to offer digital services and features and becoming a competitive player in digital.
Visa shares are down 17% this year, and the shares are trading at 26 times earnings over the past 12 months, the cheapest stock valuation in more than five years outside of the 2020 slump.
