Two Dow Stocks to Buy and One to Avoid This March
For nearly 129 years, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) has remained a crucial indicator of Wall Street’s health and stability. This index, which began in May 1896 with just a dozen industrial components, now includes 30 diversified, long-established multinational companies.
However, a rich history of profitability does not guarantee that all 30 stocks are worth buying, especially in a market that is historically expensive. As we move into March, two Dow stocks stand out as solid investment opportunities, while another carries too many risks to consider.
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Image source: Getty Images.
Top Dow Stock to Buy: Johnson & Johnson
As volatility rises on Wall Street due to concerns about President Donald Trump’s tariff policies, the first standout Dow stock to buy this month is Johnson & Johnson (NYSE: JNJ). Its shares are considerably less volatile than the S&P 500, making it a safer choice.
Investing in healthcare stocks often proves wise due to their defensive nature. Regardless of economic downturns, people continually need medical care and medicines, ensuring steady demand. This leads to consistent operating cash flow for Johnson & Johnson every year.
What has propelled J&J’s success over the past 15 years is its strategic pivot toward brand-name drugs. After spinning off its consumer health segment, Kenvue, in 2023, the innovative medicine segment now represents nearly two-thirds of its net sales. Despite the finite exclusivity of novel drugs, their margins and pricing power remain strong.
This stability in cash flow, along with its expanding portfolio of brand-name drugs and robust pricing power, led to 35 consecutive years of adjusted operating earnings growth before the COVID-19 pandemic, illustrating the consistency of the company’s growth trajectory.
Another contributing factor to J&J’s long-term success is the stability in its leadership. Since its inception 139 years ago, the company has had only 10 CEOs, including the current leader, Joaquin Duato. Such continuity guarantees that key growth initiatives receive consistent oversight.
Finally, the valuation of Johnson & Johnson remains attractive, with a forward price-to-earnings (P/E) ratio below 15. Additionally, J&J’s board has increased quarterly payouts for 62 consecutive years, resulting in a current yield of about 3%.
Image source: Getty Images.
Another Dow Stock Worth Buying: UnitedHealth Group
Another strong investment option this month is UnitedHealth Group (NYSE: UNH). This healthcare and insurance provider presents a solid buying opportunity.
Recently, shares of UnitedHealth dropped 24% from an all-time high in November, influenced by a variety of factors, including a Department of Justice investigation into its Medicare Advantage billing, the unfortunate death of an industry leader, and a cybersecurity breach affecting over 190 million individuals.
While UnitedHealth has denied the Medicare-related allegations, the healthcare insurance industry generally enjoys strong pricing power, even during economic fluctuations.
Significantly, UnitedHealth’s healthcare solutions subsidiary, Optum, is a major growth driver. Optum offers services like primary care management and pharmacy-benefit management, and it is growing faster than traditional insurance segments while maintaining higher operating margins.
The services provided by UnitedHealth are not likely to be affected by economic cycles, given the unpredictable nature of illness. This consistency ensures steady demand for healthcare services.
For patient investors, UnitedHealth’s valuation is appealing as well. Shares ended March 4 at a forward P/E ratio of 14, representing a 28% discount to its average over the past five years.
The Dow Stock to Avoid: Boeing
Not all Dow stocks present good opportunities. Given the current high market valuations and the economic uncertainties, Boeing (NYSE: BA) appears to be a stock to avoid.
While Boeing may not seem problematic at first glance—having dropped over 60% from its peak and having a backlog of $521 billion with over 5,500 commercial planes—it also faces significant headwinds that could pose risks for investors.
Boeing Faces Challenges with Six Years of Losses and Struggles Ahead
Looks can be deceiving.
Ongoing Financial Struggles
Boeing has recorded net losses totaling $35.7 billion over the past six years, a stark indication that the company’s struggles are largely self-inflicted. Issues with mechanical and wiring components in its commercial aircraft have resulted in groundings and delivery delays, significantly impacting production expansion efforts. Additionally, labor union strikes have contributed to the company’s operating difficulties.
Balance Sheet Concerns
Further unsettling is Boeing’s balance sheet. During last year’s strikes, the company issued $18.2 billion in common stock, after factoring in issuance costs, to stabilize its financial position and mitigate the risk of a credit downgrade. It remains to be seen if Boeing will require more dilutive offerings in light of lower demand for its planes and persistent production challenges.
Market Context and Future Outlook
Another reason to consider avoiding Boeing stock in March, and possibly in the near future, is the Federal Reserve Bank of Atlanta’s updated GDPNow forecast. It predicts a contraction of 2.8% in U.S. gross domestic product (GDP) during the first quarter. Historically, Boeing has shown strong declines in stock performance during recessions, ranking among the worst performers in the S&P 500.
Following six consecutive years of heavy losses, Boeing now faces the daunting task of regaining investor trust by addressing its production issues and improving its financial health. At this moment, the situation appears to be a wait-and-see scenario—one that many investors might consider avoiding for now.
Investment Insights on Johnson & Johnson
Before investing $1,000 in Johnson & Johnson, here are some insights to ponder:
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Sean Williams has no positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue. It also recommends Johnson & Johnson and UnitedHealth Group, along with the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
The views expressed in this article are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
