This year has turned out to be one of the best for the markets in a long time. It's been reflective of the performance of the various Dow Jones Industrial Average stocks.
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The SPDR Dow Jones Industrial Average ETF (NYSEARCA: DIA ), which tracks the various stocks in the venerable index, has managed to gain nearly 15% year-to-date, as the index has surged toward the elusive and psychological 20,000 mark. The Dow Jones may have finally gotten its mojo back.
Heading into the new year, those gains could keep coming for the Dow Jones stocks as continued improvements and gains in the economy, regime changes in the white House and other factors have only gotten stronger in recent weeks. There certainly will be more gains for Dow Jones stocks in the weeks and months ahead.
With that in mind, investors have a choice to play the various Dow Jones stocks. They could buy the Diamonds (DIA) or focus on the best players in the index. But, which ones could lead to the best gains in the year ahead?
Here are the three best ones to buy today.
Best Dow Jones Stocks to Buy: Mastercard (MA)
When it comes to the Dow Jones stocks, Mastercard Inc (NYSE: MA ) has one of the biggest current economic moats and brightest futures. That's because MA is a direct play on our growing cashless society.
Like rival Dow Jones stock Visa Inc (NYSE: V ), MA is simply a payment processor. Contrary to popular belief, Mastercard doesn't actually do any actual lending. The company simply moves money from one account to another along its secured payment network.
Basically, MA functions as a middleman by providing the authorization, clearing and settlement of funds. It's a toll-way, and as a toll-way MA makes money by charging fees to use its "road." Every time someone swipes a credit or debit card, Mastercard charges merchants, banks and other institutions a fee for using that huge payment network.
This allows Mastercard to rake in the cash. And, since its network is already built out and is so widely used, margins and free cash flows remain extremely high. Since its IPO just a few years ago, Mastercard has raised its payout by more than 900%.
Even better, MA has moved into mobile payments and expanded its online payment network. That puts MA stock right in the cross hairs of future growth as we continue to move toward a cashless society. When it comes to Dow Jones stocks, MA has the goods to keep gains going in the New Year and beyond.
Best Dow Jones Stocks: Disney (DIS)
Perhaps the best Dow Jones stocks to buy are the ones that have suffered a tad bit, and that includes Walt Disney Co (NYSE: DIS ).
Things haven't been going gangbusters for the House of Mouse lately. The problems stem from four letters: E-S-P-N. With a million blogs, networks and other ways for viewers to get their sports fix, ESPN isn't the behemoth it once was.
Adding to this is the general trend of cord cutting and the continued impact of streaming video. With this in mind, viewership and revenue for the sports channel have hurt Disney's bottom line.
This has also hurt DIS stock over the last year .
But, perhaps those issues were a tad bit overblown. DIS actually has a lot going for it, namely its studio entertainment, parks and resorts and consumer products business. All of these divisions continue to grow like weeds. For example, its latest Star Wars movie, Rogue One , continues to dominate the box office, while its Marvel comic franchise has produced many hits.
At the same time, DIS has unveiled plans to fight ESPN's losses with new partnerships, streaming services and other tech buyouts. These should help turn the tide for any losses at the sports channel. In the end, Disney could be one of the best turnarounds when it comes to the Dow Jones stocks.
Best Dow Jones Stocks to Buy: Goldman Sachs (GS)
Much of the rally in the Dow Jones has come from gains at Goldman Sachs Group Inc (NYSE: GS ). The vampire squid has been surging over the last few months on the back of the so-called Trump Bump. But, the real win is that GS could keep those gains going in the year ahead.
There are two big reasons why.
First, Goldman has shifted much of its focus away from proprietary trading. Historically, stock, currency and derivatives trading has made up the bulk of GS's revenue. However regulation and low interest rates have limited the effect of these businesses.
Well, with Trump in charge, it's now game-on for those businesses as he has vowed to cancel/veto plenty of regulations in the financial industry . Janet Yellen and company have also helped with the latest interest rate boost.
Secondly, Goldman has moved back heavily into good old fashioned investment banking, as its trading arm was hindered under regulations. M&A advising, asset management and commercial lending have all increased at Goldman.
These activities are only expected to rise over the next year as the economy strengthens. And, Goldman will make plenty of fees from all that book running, interest rate spreads and management fees. This has only boosted quarterly and yearly earnings estimates for the Dow Jones stock. Meanwhile, GS stock shares remain cheap at a forward P/E of only 13.
For investors, this means that Goldman is one of the best Dow Jones stocks to buy in terms of value.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.