For nearly 129 years, the iconic Dow Jones Industrial Average(DJINDICES: ^DJI) has served as a key barometer of Wall Street's health and stability. This index, which began its existence with a dozen mostly industrial components in May 1896, is now home to 30 diverse, time-tested, multinational businesses.
But just because the Dow's components have a rich history of profits, it doesn't mean all 30 stocks are necessarily worth buying -- especially amid a historically pricey stock market.
As we steam ahead into March, two Dow stocks stand out for all the right reasons and can be purchased with confidence, while another remains rife with red flags and should be avoided.
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Dow stock No. 1 investors can buy hand over fist in March: Johnson & Johnson
With volatility picking up on Wall Street due to concerns about President Donald Trump's use of tariffs, the first no-brainer Dow stock to buy in March is none other than healthcare conglomerate Johnson & Johnson(NYSE: JNJ), whose shares are less than half as volatile as the benchmark S&P 500.
One of the best aspects of buying healthcare stocks is their defensive nature. People don't suddenly stop getting sick or requiring prescription medicines and/or medical devices just because the U.S. economy or stock market hits a rough patch. Demand for novel drugs and innovative medical technologies tends to be consistent in any economic climate, which leads to predictable operating cash flow for Johnson & Johnson year after year.
What's really helped J&J shine over the last 15 years has been its decisive shift toward brand-name drug development. Following the spinoff of its consumer health segment (Kenvue) in 2023, J&J's innovative medicine segment accounts for close to two-thirds of its net sales. Even though novel drugs have a finite period of sales exclusivity, the margins and pricing power of brand-name therapeutics are phenomenal.
This consistency of cash flow, coupled with its burgeoning brand-name drug portfolio and strong pricing power, led to 35 consecutive years of adjusted operating earnings growth prior to the COVID-19 pandemic. This offers an example of just how sustainable and predictable Johnson & Johnson's growth has been.
Another rarely touted catalyst that has contributed to J&J's long-term success is the lack of turnover in the executive suite. In the 139 years since its founding, the company has had just 10 CEOs, including current CEO Joaquin Duato. A lack of change at the top ensures that key growth initiatives are being overseen from start to finish.
Lastly, Johnson & Johnson's valuation remains attractive. The company's forward price-to-earnings (P/E) ratio remains below 15, and J&J's board has increased its quarterly payout for 62 consecutive years, leading to what's currently a 3% yield.
Image source: Getty Images.
Dow stock No. 2 investors can purchase with confidence in March: UnitedHealth Group
The second Dow component that investors can buy hand over fist in March is insurance and health solutions provider UnitedHealth Group(NYSE: UNH). That's right, another healthcare stock!
After hitting an all-time high in November, shares of UnitedHealth Group have fallen by 24%. This decline has been fueled by a confluence of factors, including a Department of Justice investigation into UnitedHealth's Medicare Advantage insurance billing practices, the tragic death of leading insurance executive Brian Thompson, and a cybersecurity attack that affected over 190 million people.
For what it's worth, UnitedHealth has denied the allegations against its Medicare Advantage insurance operations, as reported by The Wall Street Journal. The beauty of the healthcare insurance business is that providers almost always possess exceptional premium pricing power (say that three times fast!) in any economic climate.
But the more impressive growth story attached to UnitedHealth Group is its healthcare solutions subsidiary Optum. Optum provides a host of services, including primary care management, pharmacy-benefit management, data analytics software, and various wellness solutions. Most importantly, Optum is growing sales at a faster pace than the traditional insurance segment, as well as generating a higher operating margin.
Additionally, the services UnitedHealth Group provides aren't going to be adversely impacted by the ebbs-and-flows of the U.S. economy. Since we can't control when we get sick or what ailment(s) we develop, demand for healthcare services is consistent and predictable.
Also keeping with the theme, UnitedHealth Group's valuation makes a lot of sense for patient investors. Shares ended March 4 at a forward P/E multiple of 14, which represents a 28% discount to its average forward P/E multiple over the trailing-five-year period.
The Dow stock worth avoiding in March: Boeing
However, not all Dow stocks are necessarily going to be winners. With the market historically expensive and President Trump's tariff talk ruffling feathers, the last thing investors should want in their portfolios is a company being dragged down by headwinds. Aircraft and defense company Boeing(NYSE: BA) fits the bill as the Dow component to avoid.
On the surface, Boeing doesn't look all that bad. Its stock has declined more than 60% from its all-time high, and the company operates as part of a duopoly in commercial jetliner manufacturing. When 2024 came to a close, Boeing had a total company backlog of $521 billion, which includes north of 5,500 commercial planes. But surface-scratching looks can be deceiving.
Digging a bit deeper, Boeing has lost money for six consecutive years. The primary takeaway from the company's aggregate $35.7 billion in net losses over six years is that its wounds are predominantly self-inflicted. Mechanical and wiring issues with the company's commercial planes have led to groundings and delivery delays that have hampered its ability to expand production. Labor union strikes have hurt its operating results, as well.
Boeing's balance sheet doesn't inspire confidence, either. When its workers were on strike last year, Boeing issued $18.2 billion worth of its common stock, net of issuance costs, to shore up its balance sheet and avoid credit downgrades. It's not yet clear if the company has moved beyond the need for dilutive offerings given weaker demand for its aircraft and ongoing production issues.
Another reason Boeing is a stock to avoid in March (and for the foreseeable future) is the Federal Reserve Bank of Atlanta's updated GDPNow forecast, which estimates U.S. gross domestic product (GDP) will contract by 2.8% in the first quarter. Statistically, Boeing has been one of the worst-performing stocks in the S&P 500 when recessions occur.
Following six years of steep losses, Boeing will have to prove to investors that it's fixed its mostly self-inflicted production issues and mended its balance sheet. It's a wait-and-see story stock that's simply not worth the hassle at the moment.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kenvue. The Motley Fool recommends Johnson & Johnson and UnitedHealth Group and recommends the following options: long January 2026 $13 calls on Kenvue. The Motley Fool has a disclosure policy.
