These 3 Dow stocks are screaming buys

124 year old man Dow Jones Industrial Average (DJ INDICES: ^ DJI) made history last week. After briefly falling below 19,000 at the deepest part of the 2019 coronavirus disease (COVID-19) -induced bear market in March, the iconic index closed above 30,000 for the first time. This is a psychologically significant achievement in an otherwise topsy-turvy year.

But just because the Dow Jones is hitting new highs doesn’t mean opportunistic investors can’t find value in the 30-stock index. There are currently three Dow stocks that appear to be nothing short of screaming buys.

Visa

Although Visa (NYSE: V) is a stone’s throw from an all-time high, it is a dominant payment processor that still appears to offer solutions to long-term patient investors.

The beauty of the Visa business model is that it is designed to evolve with the US and global economy. Although it is sensitive to economic contractions and recessions like just about every other financial services company, periods of contraction and recession are often measured in months. Comparatively, booms and bull markets are typically multi-year events. A bet on Visa is simply a bet on the expansion of the United States and the global economy.

Visa actually improves its chances of long-term success by not being drawn into loans like some of its peers. As the company sticks strictly to the payment processing side of the equation, it avoids the inevitable rise in credit delinquencies that coincide with economic contractions and recessions. With no direct responsibility for poor credit quality, Visa consistently maintains a profit margin north of 50%.

It also holds the lion’s share of the credit card network’s purchasing volume in the world’s No. 1 consumer market, the United States. In the nine years since the Great Recession, Visa increased its share of the U.S. network’s credit card purchasing volume by more than 9 percentage points to 53%. This is over 30 percentage points higher than the next closest competitor. What is clear is that Visa is the most trusted name in payment facilitation among US merchants.

Visa’s dominance means it will never be cheap action in the traditional sense. But this outperformance also means it’s a loud buy, as long as you have a long-term investment horizon.

Walgreens Boots Alliance

While Visa never seems to be so far from a new all-time high, the same can’t be said for the pharmacy giant Walgreens Boots Alliance (NASDAQ: WBA), which is near an eight-year low.

The great concern of Walgreens is the growing competition in the pharmacy industry. He already has to deal with people like CVS Health and Rite aid, and will now go along with Amazon, which announced its entry into the pharmacy industry on November 17. Amazon has big pockets and isn’t afraid to undercut its price competition to gobble up market share, which is clearly of concern to Wall Street.

But ignoring Walgreens Boots Alliance would be a mistake, especially with the company’s turnaround strategy already well underway. Walgreens fights competition by cutting annual spend by at least $ 2 billion, while reinvesting heavily in digitalization. This means double-digit growth in online sales, as well as a wider selection of items that can be purchased and picked up via mobile orders.

Perhaps the most unique aspect of Walgreens’ operating model is its partnership with VillageMD to develop 700 full-service clinics in its stores. The idea here is to make Walgreens a one stop shop for the medical needs of patients. If this strategy is successful, Walgreens should see sales in its higher margin drugstore segment increase. Providing a wider range of services should also help pedestrian traffic and business recovery.

Walgreens Boots Alliance may operate in a highly competitive space, but with less than 8x Wall Street’s profit forecast for the coming year, it seems like a compelling buy.

Salesforce.com

Last, but not least, enterprise cloud computing solutions provider Salesforce.com (NYSE: CRM), which is one of three new components to enter the Dow this year, looks like a business investors will want to own.

Cloud solutions grew like wildfire before the COVID-19 pandemic, but they have gained in importance in 2020. With the traditional working environment disrupted, there is a growing need to rely on suppliers of third-party cloud to spin the wheels, so to speak. Salesforce is playing its role as the leading provider of customer relationship management (CRM) solutions, with 18.3% of global CRM software spend in 2019, according to Gartner. That’s more than double the share of its next closest competitor.

The great thing about Salesforce is that pretty much every business involved in selling is a potential customer. While this logically includes retail, we are finding that companies involved in finance, manufacturing, and information technology are also using CRM to a greater extent. Salesforce’s continuous innovation allows it to build on the solutions it already offers to its customers and to further strengthen its relationships. Or, in English, its customers are increasingly reliant on CRM software and are less likely to switch to a competing CRM company.

Last week, Salesforce made waves when it was revealed the company was in late discussion about potentially buying Slack Technologies. If the deal goes through, it would give Salesforce a way to offer or pitch its solutions to Slack business customers, in the same way. Microsoft cross-sell in the CRM and enterprise data sharing space through Microsoft Teams.

The point is, Salesforce is a fast growing beast that has lost over 12% from its all-time high at the end of August. It’s a holiday gift for opportunistic long-term investors.