The Dow Jones Industrial Average celebrated its 125th birthday on Wednesday.
The index looks a lot different than it did when it was first published on May 26, 1896, with none of its original 12 components remaining. The original index created by Charles Dow included utilities and staples, and there’s only one name on the original list that most investors would recognize now: General Electric (NYSE: GE).
Today, the index’s 30 members include several tech heavyweights, including Apple (NASDAQ: AAPL), Intel (NASDAQ: INTC), Microsoft (NASDAQ: MSFT), and Salesforce (NYSE: CRM), as well as names like American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), and Home Depot (NYSE: HD).
But of these well-known names, Chantico Global’s Gina Sanchez says Microsoft is her pick of the bunch.
“This is a company that has just beat earnings, and this was a story that was already building before the pandemic,” Sanchez, Chantico’s CEO and Lido Advisors’ chief market strategist, said. “It got some extra rocket fuel during the pandemic as they built out their cloud-based offering which is the Azure suite.”
Microsoft delivered a big earnings beat at the end of last month. The company reported earnings per share of $1.95 on revenue of $41.71 billion, compared to estimates for earnings per share of $1.78 on revenue of $41.03 billion. The company said its Azure public cloud business—which competes with Amazon (NASDAQ: AMZN) Web Services—grew 50% in the quarter, beating estimates for growth of 46%.
“Now, they’re experiencing the recovery as PC sales pick up [and] their core Windows sales are also picking up,” Sanchez added. “It’s just hitting on every cylinder.”
Miller Tabak’s Matt Maley has his eye on a different Dow name: Boeing.
“The stock obviously got hit even before the pandemic because of this whole problem it had with the 737 Max,” Maley said. “And the stock, unlike many, many stocks in the Dow and the overall market that have come back to pre-pandemic levels or even higher, we haven’t seen that at all with Boeing.”
Pointing to Boeing’s chart, Maley noted that it has made a series of higher highs and higher lows, establishing an upward-trending channel, and is nearing a breakout above resistance going back to its 2019 peak.
“Boeing is… too big to fail,” Maley added. “They’re way too important to the airline industry, which is going to continue to grow out of this pandemic and of course to the defense industry, and we still have issues with the Middle East, growing tensions in China. So there’s going to be a situation where the stock is well behind a lot of these Dow components, but its upside should be just as good or even greater.”
Boeing shares gained nearly 4% on Thursday after the FAA announced that it will pay $17 million in penalties as part of a settlement to resolve some outstanding issues related to the 737 Max.
While not a small fine, it marks another step toward putting the company’s Max woes behind it and points to an aerospace industry that is taking problems more seriously these days.
“We take our responsibility to meet all regulatory requirements very seriously,” Boeing said in a statement. “These penalties stem from issues that were raised in 2019 and which we fully resolved in our production system and supply chain. We continue to devote time and resources to improving safety and quality performance across our operations.”