Get those birthday candles lit and on the cake! Exactly 126 years ago today, the Dow Jones Industrial Average (DJI) made its debut as a 12-stock index comprised predominantly of (surprise) industrial companies. Since then…
it’s transformed into a widely followed 30-component index packed with successful, multinational businesses.
Although Dow Jones stocks are often viewed as mature (i.e., relatively slow-growing) companies, select analysts on Wall Street see significant upside potential in a handful of names — especially with the Nasdaq Composite and S&P 500 both hitting bear market territory.
Based on a number of high-water price targets from Wall Street, the following three Dow stocks offer upside ranging from 107% to 147% over the next 12 months.
Salesforce: Implied upside of 107%
The first Dow Jones stock that has the potential to more than double investors’ money, at least according to one analyst, is cloud-based customer relationship management (CRM) software solutions provider Salesforce.com (CRM 2.28%).
According to analyst Brent Bracelin of Piper Sandler, Salesforce can reach $330 a share, which would mark a 107% increase from where the company’s stock ended last week. Bracelin was impressed with the demand for Salesforce’s CRM solutions exiting the fourth quarter, and believes it’s one of the least expensive large-cap cloud stocks among those he and his company cover.
CRM software is used by consumer-facing businesses to enhance existing customer relationships and boost sales. It helps companies with online marketing campaigns, can be used to run predictive sales analyses to determine which clients might purchase a new product or service, and is helpful in overseeing product and service issues.
Salesforce is the undisputed kingpin of the CRM arena. Based on a recently released report from IDC, Salesforce accounted for 23.8% of global CRM spending last year. This marked the company’s ninth consecutive year as the top dog in CRM. More importantly, the company’s 23.8% share is more than 2 percentage points higher than the shares of Nos. 2 through 5, combined. It’s unlikely to be dethroned anytime soon.
What’s more, Salesforce is growing at a significantly faster rate than the CRM software industry as a whole. Aside from its leading market share, acquisitions are playing a critical role. CEO Marc Benioff has overseen a number of earnings accretive deals, including MuleSoft, Tableau Software, and Slack Technologies. These acquisitions allow the company to cross-sell on new platforms in order to grow its ecosystem.
Although it’s tough to see Salesforce outperforming in an environment with such negative investor sentiment, I do believe $330 is a very realistic price target at some point in the future.
Walt Disney: Implied upside of 124%
Another Dow stock with jaw-dropping upside potential over the next 12 months, according to Wall Street, is the House of Mouse, Walt Disney (DIS 2.17%).
The high-water price target of $229 on shares of Disney belongs to Ivan Feinseth of Tigress Financial. In Feinseth’s view, new theme park attractions, higher in-park spending, park reservation optimization, and growth in Disney+ streaming are all reasons shares could rally 124% from where they ended this past week.
On one hand, hitting $229 is going to come with its fair share of headwinds. Walt Disney continues to be weighed down by international park closures due to COVID-19. Additionally, the company’s streaming segment has lost nearly twice as much through the first six months of fiscal 2022 ($1.48 billion) relative to the same period last year. Everything from higher programming and production costs to marketing expenses have weighed on this direct-to-consumer segment.
On the other hand, Walt Disney has a slew of competitive advantages working in its favor that could make $229 an eventual reality (but probably not within the next 12 months). For instance, few companies have been able to successfully transcend generational gaps quite like Disney. It’s why the company’s theme parks are so attractive, and perfectly explains how the Disney+ streaming service was able to sign up 137.7 million people in just 2 1/2 years. It took Netflix more than 10 years to reach a comparable number of streaming subscribers.
Walt Disney is also pretty well insulated from the effects of inflation. Even though inflation is historically high, families aren’t going to theme parks with the expectation of doing things cheap. Disney has been…
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