3 Dow stocks with up to 95% upside, according to Wall Street


Fi.e. almost 126 years, the Dow Jones Industrial Average (DJINDICES: ^DJI) has been a popular benchmark for investment success. Originally a 12-stock index that was (unsurprisingly) filled with industrial companies, the Dow Jones is now made up of 30 widely diverse multinational companies.

Although the Dow Jones has its flaws (for example, it’s a price-weighted index), the mature, profitable companies it hosts are exactly the type of companies one expects that the value increases over a long period. This is what makes Dow stocks so widely held.

But not all components of this iconic index are created equally. Based on Wall Street’s high water price target estimates, the following trio of Dow stocks offer upside ranging from 53% to 95% over the next 12 months.

Image source: Getty Images.

Intel: implicit increase of 53%

The first Dow stock with incredible upside potential over the next year is the semiconductor giant Intel (NASDAQ: INTC). According to the $72 price target issued by Tigress Financial analyst Ivan Feinseth, Intel could rise by 53%.

In particular, Feinseth believes the company’s continued investment in processor development could improve its market share. It also points to Mobileye’s upcoming initial public offering as a possible upward catalyst for Intel shares (more on that in a moment).

Investors who buy Intel stock typically do so for two reasons: either to take advantage of the stable operating cash flow from its legacy operations, or to position themselves for an organic growth spurt over the next two years. .

Regarding the former, Intel generates the bulk of its revenue from its Client Computing Group (CCG) and Data Center Group (DCG). Put simply, it continues to make money as a giant in personal computer processing and data center solutions. While not the high growth opportunities they once were, CCG and DCG generate juicy margins and ample cash flow that Intel can use to reinvest in higher growth initiatives and pay its delicious dividend yield of 3.1%.

Beyond its legacy operations, Intel is expected to make waves with its Internet of Things (IoT) solutions. Sales of IOT solutions jumped 33% last year, though part of that growth was simply a normalization of order demand following COVID-19 lockdowns in 2020. As wireless devices become more interconnected, the demand for IoT solutions is expected to grow steadily.

Additionally, autonomous vehicle company Mobileye, which Intel acquired for $15.3 billion in 2017, is set to go public. Mobileye, which makes driver assistance chips used in newer vehicles, increased sales by 43% in 2021 to $1.4 billion. Given the demand surrounding next-generation vehicles, building Mobileye could be a lucrative venture for Intel.

While I see plenty of upside opportunities in Intel shares, $72 might be asking a little too much over the next 12 months for a traditionally slow stock.

Mickey and Minnie Mouse welcome guests to Disneyland.

Image source: Disneyland.

Walt Disney: implicit increase of 74%

A second Dow stock that Wall Street predicts could generate magical gains over the next year is waltz disney (NYSE: DIS). It doesn’t sound like a broken record, but Tigress’s Ivan Feinseth also holds the highest price target on Disney. If its price target of $229 is achieved, Disney shareholders would enjoy a 74% gain.

In a recently published research note, Feinseth highlighted new theme park attractions, optimization of theme park reservations, increased in-park spending, and the rise of the Disney+ streaming platform. of the company as reasons why the shares could rise significantly.

As many of you probably know, Walt Disney has been knocked out by the pandemic. The company has had to deal with temporary theme park closures, as well as individuals/families not quite ready to interact in public spaces with large crowds. But things seem to be changing.

Disney’s theme parks saw an increase in attendance in the fiscal first quarter (ended Jan. 1, 2022) as innovation and pricing power really kicked in. Disney has had no problem passing higher costs onto its customers and has benefited from the introduction of its Genie+ and Lightning Lane entry services for customers who want faster access to their favorite rides and attractions. . The mere fact that Genie+ and Lightning Lane are mentioned as growth engines indicates that lines are getting longer at Disney theme parks (i.e. travelers are back).

Aside from a big rebound in theme park activity, Disney+’s subscription growth continues to amaze. In just over two years since the launch of Disney+, the company has attracted nearly 130 million subscribers. It demonstrates the power of streaming service convenience, as well as the value placed on decades of popular and exclusive content from Disney.

But in a situation similar to Intel, I think $229 over 12 months is too aggressive a price target for Walt Disney. While a lot has gone well to start the new fiscal year, it’s unclear how much the rapidly rising inflation might affect the economy as a whole, and therefore consumers’ vacation plans. I expect the value of Walt Disney to increase over time, but $229 is not on my personal radar over the next year.

An employee wearing a headset talking with a customer sitting at his desk.

Image source: Getty Images.

Salesforce: 95% implied benefit

However, the creme de la creme of upside opportunities lies in the customer relationship management (CRM) company. Salesforce.com (NYSE: CRM). According to Wall Street’s high price target, Salesforce could reach $385 within the next year. This implies up to 95% upside in what has historically been the fastest growing company in the Dow Jones.

For those of you wondering, cloud-based CRM software solutions are being used by consumer-facing businesses to improve existing relationships. For example, CRM software can be used to manage product or service issues, oversee an online marketing campaign, or be tasked with running predictive sales analytics. This software is popular with the service industry, but finds its place in less common channels, such as the financial, healthcare, and industrial sectors.

Although estimates vary, global spending on CRM software is expected to grow by at least double digit percentages by mid-decade. Salesforce is at the center of this rapidly growing trend. According to an IDC report, Salesforce drove nearly 24% of global CRM spend in the first half of 2021. The company’s four closest competitors in terms of market share do not even total 20%. on a combined basis. This makes it the go-to reference for CRM solutions.

Another reason Salesforce offers superior growth is CEO Marc Benioff’s penchant for profitable acquisitions. Some of the more notable takeovers include MuleSoft, Tableau, and Slack Technologies. The purchase of these companies expanded Salesforce’s reach to small and medium-sized businesses, as well as additional platforms for cross-selling its solutions.

If Benioff’s aggressive growth outlook proves accurate, Salesforce is expected to generate at least $50 billion in sales by fiscal year 2026 (calendar year 2025), which would equate to nearly doubling sales from fiscal year 2022 ($26.5 billion). This kind of growth could well earn a stock price of $385. However, reaching 95% upside over the next 12 months is probably not in the cards.

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Sean Williams has no position in the stocks mentioned. The Motley Fool owns and recommends Intel, Salesforce.com and Walt Disney. The Motley Fool recommends the following options: January 2023 Long Calls at $57.50 on Intel, January 2024 Long Calls at $145 on Walt Disney, January 2023 Short Calls at $57.50 on Intel, and January Short Calls 2024 at $155 on Walt Disney. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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