The Dow Jones Industrial Average (DJINDICES:^DJI) is up about 9% this year through Nov. 9. The index tracks 30 of the largest U.S. companies, picked by a committee that typically adds a stock only if the company has an excellent reputation and sustained growth. That makes the Dow a great place to hunt for truly unstoppable stocks that have the financial strength and business durability to keep growing over the long term.
Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), and Home Depot (NYSE:HD) fit that description. Here’s why these Dow stocks are worth buying in November and holding for the next decade.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
1. Amazon
Amazon shares are up about 17% year to date through Nov. 9, beating the Dow. Its cloud computing arm, Amazon Web Services (AWS), grew sales 39% year over year to $46 billion last quarter, and CEO Andy Jassy believes AWS can become “a trillion-dollar revenue business in the next five to 10 years.”
AWS alone could justify holding the stock, but Amazon still has significant growth in its online retail business. Nearly 80% of retail still happens in physical stores. That provides a long runway of growth for Amazon’s online store.
Its artificial intelligence (AI) expertise from AWS can help it unlock that opportunity. U.S. shoppers who use Alexa for Shopping, Amazon’s AI assistant, spend 50% more per order than non-users. And it’s still seeing growing usage, with customer interactions up 570% year over year in Q3.
Amazon is pursuing these opportunities while becoming more profitable. Trailing-12-month operating cash flow rose 29% to $168 billion. Amazon also holds about $114 billion in cash and marketable securities, providing ample resources to invest in AI and expand its e-commerce business.
At 28 times forward earnings, Amazon trades at a premium to the S&P 500‘s (SNPINDEX:^GSPC) 19x forward P/E, but that is supported by surging profitability and market dominance across cloud and e-commerce. Jassy sees a path to reaching $2 trillion in annual revenue over time across the AWS and retail businesses, making Amazon a quality growth stock to buy and hold.
Image source: Getty Images.
2. Alphabet (Google)
Shares of Alphabet, the owner of Google and YouTube, are down about 7% year to date. The recent dip followed third-quarter results showing search ad revenue came in below Wall Street’s expectations. However, total revenue grew a solid 25% year over year, with AI serving as the main catalyst. The dip is a chance to buy a dominant tech company at a lower price.
