7 Must-Buy Dow Stocks for Your January Buy List

After a rough 2022, there is hope ahead for Dow stocks to buy. The Dow Jones Industrial Average is down more than 6% year-to-date, so far. However, with some research, picking out the top-performing stocks for 2023 can set a framework from which to build an investment portfolio that will outperform its peers. Most analysts believe that a potential economic recession will be significantly less severe than the last one. Hence, it’s best to invest in some of the top Dow stocks to buy for the long haul.

The names mentioned below are some of the most robust businesses effectively generating incredible free cash flows. These companies have effectively weathered the economic storm this year and continue to march forward with considerable aplomb. Moreover, these stocks are trading at a hefty discount, offering tremendous upside potential.

AAPL Apple $126.20
HD Home Depot $314.00
TRV Travelers Companies $186.96
CAT Caterpillar $239.65
CVX Chevron $175.36
KO Coca-Cola $62.24
MCD McDonald’s $262.15

Dow Stocks to Buy: Apple (AAPL)

An image of a building with the Apple logo on it, a pink sunset in the background

Source: askarim / Shutterstock

One of the top Dow stocks to buy is Apple (NASDAQ:AAPL). Its success as one of the most influential technology companies worldwide can be attributed to its closed-loop ecosystem. The integrated system enables Apple to produce lucrative, continuously updated products with the latest software and technologies, demonstrating its commitment to innovation and modernization. Coupled with their impressive financial track record, including a consistent improvement in sales and earnings, it’s no wonder that Apple remains a powerful force in the tech sector.

Despite the news of production issues due to China’s COVID-19 lockdowns, Apple’s position and impressive reputation remain unshakable. Warren Buffet, one of the most decorated investors of all time, has maintained Apple as the largest single holding in his illustrious portfolio. This trust in the company is further evidenced by the fact that its stock is down over 20% from its peak levels at the moment, making it an extremely attractive opportunity for value investors. All signs thus point to this being an excellent period to invest in AAPL stock before the markets recover.

Dow Stocks to Buy: Home Depot (HD)

A photo of a person in a neon green vest holding blueprints and standing behind a white table covered with supplies like pencils, a computer, a ruler and two wooden house shapes.

Source: ARMMY PICCA/ShutterStock.com

Despite the volatility HD as one of the top Dow stocks to buy, there’s a lot to like about it over the long-term. Home Depot (NYSE:HD) is heavily focused on digitalization and sustainability, which puts them in a unique position once the market recovers. The company has also set up an equity line to expand its services and new products for customers. Additionally, Home Depot has taken numerous cost-saving initiatives that have enabled it to increase inventory availability and reduce operating costs. These strategies will help them continue to be a leader within the retail home improvement space even when economic conditions are challenging.

With rising interest rates, it is becoming necessary for people to become more involved in DIY projects. The inflationary environment has taken a far larger bite out of real household earnings than normal, thus fostering the need for more DIY projects. As such, it can be viewed as a beneficial situation for Home Depot, which can provide the necessary resources and materials needed to complete them. The cost savings consumers will realize from handyman services repurposed as DIY can turn consumer sentiment and loyalty towards Home Depot, resulting in greater returns for shareholders and prosperity for investors.

Dow Stocks to Buy: Travelers Companies (TRV)

Red umbrella covering stacks of bills

Source: Shutterstock

Travelers Companies (NYSE:TRV) is an another one of the top Dow stocks to buy for those wanting to invest in an inelastic enterprise. It has an incredibly strong reach across the United States economy as the second-largest writer of U.S. commercial property casualty insurance. With rising rates, this company can be expected to outshine many other stocks as it stands its ground without major problems during booms and busts–great news for investors who are stabilized by security and some assurance that they’ll get a return on their investments. The travel industry is certainly never immune to economic fluctuations and disruption; however, the demand for important insurance policies will remain strong.

This is because individuals understand more now than ever that anything can happen in this unpredictable world. The coronavirus pandemic has proven this point beyond a shadow of a doubt as it brought about an unexpected upheaval across the globe. Still, such extreme circumstances may make it difficult for some people to purchase a critical policy – that much must be acknowledged. Nonetheless, travelers can rely on secure, consistent, and predictable entertainment from comprehensive insurance coverage, no matter the volatility of the markets or the state of the economy.

Caterpillar (CAT)

man's hand holding wads of cash

Source: Vova Shevchuk / Shutterstock.com

Caterpillar (NYSE:CAT) is in a strong position to benefit from current economic trends. Washington’s newfound interest in investing in infrastructure projects has been great news for the company, which specializes in providing heavy equipment essential for major building projects. Even better news comes from America’s factory boom, which proves to be an extra lucrative business for CAT, with factories relying on their equipment to keep operations running smoothly. Moreover, the variety of revenue streams makes Caterpillar an appealing proposition for investors seeking profits.

The firm had an extraordinary third quarter this year, smashing expectations and setting records for the firm’s performance. It reported a top line of $15 billion and  third-quarter earnings per share of $3.87, an impressive jump from the $2.60 seen a year earlier. Despite challenging conditions with high inflation, operating profits were still able to reach 16.2%, nearly 3% higher than in the third quarter of 2021.

Chevron (CVX)

For savvy investors, Chevron (NYSE:CVX) looks like an attractive option at the moment. Its recently-released third quarter results highlighted a net profit of $11.2 billion, squeezing it just behind its record-breaking second-quarter earnings this year. Although the company’s profitability was, as expected, affected by lower oil prices, there still remains considerable potential for strong returns in the near future – something investors should certainly consider. Its portfolio of projects and investments is substantial, providing shareholders with much certainty of continued success and stability. Therefore, Chevron appears to be a safe investment choice right now and may bring good returns in the long run.

CVX stock has been up over 40% since the start of the year. It’s a remarkable achievement that current investors will likely be celebrating. They have been reaping the rewards of capital gains and enjoy a healthy quarterly dividend of $1.42 per share and a solid yield of over 3%.

Coca-Cola (KO)

a hand holding a phone hovering over the buy button for stocks

Coca-Cola (NYSE:KO) is an iconic consumer stock that continues to turn heads with its outstanding performances. The legendary Warren Buffet has long been a fan, and his backing provides confidence to investors looking to diversify their portfolios with some big-name stocks. On top of that, Coca-Cola has been increasing its dividends yearly for 60 years now, an impressive feat by any measure and an additional attraction when considering the potential payouts. If I’m looking into consumer stocks right now, Coca-Cola is definitely on my shopping list.

Despite the COVID-19 pandemic and many other struggles, Coca-Cola has still managed to bring in strong earnings. Its impressive profit margins are a testament to its tremendous pricing power across the board. Although KO stock may not have been a star performer over the last two years, it’s worth holding for the long haul due to its stellar fundamentals, long-term attractiveness, and consistent track record.

McDonald’s (MCD)

Source: Shutterstock

McDonald’s (NYSE:MCD) stock has proven to be a very rewarding investment for its shareholders over the past 10 years. It has yielded over 13% annual total return in the past decade. It has also demonstrated its commitment to shareholders by paying out $3.92 billion in dividends throughout 2021 and currently offering a yield of 2.30%, making it an attractive choice for anyone looking for reliable dividend income from a sound company with robust future prospects.

Despite inflationary pressures hitting everyone’s pocketbooks, McDonalds has managed to remain competitive. On average, the fast food giant has raised prices by 10%, but its third-quarter results demonstrated that it also gained an increasing market share in the low-income consumer sector. That implies that despite price increases, McDonald’s has provided great value and affordability for those with low purchasing power. With these positive results over the past nine consecutive quarters of growth in U.S. same-store and worldwide sales, its pricing strategy is well-founded.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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