The Dow Jones Industrial Average had a banner year in 2019. The index gained 22.3% last year, its best annual performance since 2017.
Apple (NASDAQ: AAPL) was the top performing stock in the index, returning 89% in 2019, with Microsoft coming in second with a 55.3% gain, marking its best year since 2009.
But at the start of the new year, analysts have a few favorite Dow stocks they expect to lead the index in 2020.
Their top pick is McDonald’s (NYSE: MCD), which has consensus Buy rating and target upside of more than 14%.
The fast food giant has gotten a big vote of confidence from analysts for its new CEO pick in Chris Kempczinski, who took over the top spot back in November.
But the stock couldn’t keep up with the rest of the index in 2019, returning just 12.7% for the year. However, Stephens analyst Will Slabaugh wrote in a note to clients last month that investors should expect a mid-2020 national launch for McDonald’s new crispy chicken sandwich, which should boost the stock.
“We believe the high-quality chicken sandwich market is a place MCD wants to become more relevant and anticipate a mid-year national launch,” Slabaugh wrote in the note, adding that the new sandwich has the potential to generate more traffic than McDonald’s fresh beef menu items.
Next up is Chevron (NYSE: CVX). The energy giant also underperformed the index last year, gaining 12.3% as the broader oil industry struggled. Analysts’ consensus target for Chevron anticipates the stock will gain 13.4% over the next 12 months.
Analysts are also bullish on Visa (NYSE: V), and expect the financial company to return around 10% in 2020. Wedbush recently gave the stock an Outperform rating.
“Despite a potential global economic slowdown, and uncertainty associated with an upcoming U.S. election (regulatory risk),” Wedbush analyst Moise Katri wrote in a note to clients, adding that Visa and other payment stocks will continue to benefit from trends like “the disintermediation of cash/checks by electronic payments, the proliferation of mobile payments,” and the savings from M&A activities.
Katri said that Visa has been a big winner in the global shift to credit and debit card payments and doesn’t see that trend, or the payment giant’s ability to profit from it, slowing down this year.
Nike (NYSE: NKE) made the list, with analysts projecting 9.4% upside for the stock in the year ahead.
Guggenheim analyst Robert Drbul called Nike the firm’s “Best Idea” for 2020, “as its innovation pipeline is robust ahead of the Summer 2020 Olympics amid a global secular trend toward more active/healthy lifestyles.”
“We surmise NKE is primed to unveil an onslaught of innovation in the coming months,” Drbul said, adding that he’s interested in the opportunity in the running category given the hype around Nike’s new running shoe, the ZoomX Vaporfly Next%.