The Dow is an index of 30 blue-chip stocks that are meant to be representative of the U.S. economy. It’s largely comprised of well-known companies whose brands are household names. While the Dow had a good year in 2023, rising 14% and hitting new highs, it trailed both the S&P 500 (up 25%) and Nasdaq (up 45%) in terms of gains.
This continues a trend of underperformance that has been consistent for many years now. While some Dow stocks continue to perform strongly, many are long-term laggards. This has led to calls for reform of the Dow among traders and investors who complain that the index is outdated and no longer representative of today’s economy. While we wait for those reforms to happen, let’s examine three Dow stocks to sell in January before they cause your portfolio damage.
Nike (NKE)
It’s hard to throw in the towel on Nike (NYSE:NKE). After all, the company remains the world’s biggest sneaker and athletic apparel company.
But the latest earnings from Nike didn’t inspire confidence, indicating that any turnaround in the stock is likely far off. NKE stock plunged 12% after the company behind the Swoosh logo announced mixed financial results and lowered its sales outlook. Nike’s shares ended 2023 down 9% on the year, badly lagging the 25% gain in the benchmark S&P 500.
NKE stock is now 40% below the peak it reached in November 2021, with no signs of a return to form. For its fiscal second quarter, Nike reported earnings per share (EPS) of $1.03 versus the 85 cents expected on Wall Street. However, revenue totaled $13.39 billion versus $13.43 billion that was forecast among analysts. Sales in Europe, the Middle East, and Africa fell short of estimates, leading to overall revenue missing expectations.
Looking ahead, Nike said that it now expects full-year revenue to grow 1%, compared to a prior outlook of up mid-single digits. Also, the company unveiled plans to cut costs by $2 billion over the next three years, mostly through staff layoffs. NKE stock continues to be a turnaround story.
Walt Disney Co. (DIS)
The Walt Disney Co. (NYSE:DIS) just marked its 100th anniversary.
But, there’s not much cause for celebration among shareholders. DIS stock remains one of the worst performers in the Dow, having risen only 1% in 2023. Over the past five years, the share price has declined nearly 20%. Currently, it’s trading at the same level of 2014. Is it any wonder that the company’s board of directors is engaged in a proxy battle with activist investor Nelson Peltz?
Disney CEO Bob Iger has tried to get DIS stock moving in the right direction. The company announced in early December that it was reinstating its dividend after a three-year suspension. However, that announcement, which shareholders had been clamoring for, has done little to move the share price. Plans to further reduce costs by $2 billion, raise prices at its theme parks, and acquire full control of the Hulu streaming service have similarly had little impact on DIS stock.
It appears that DIS stock continues to be weighed down. Reasons include the company’s unprofitable cable TV business, underperforming slate of films, the recent actor strike, and rising streaming competition.
Procter & Gamble (PG)
You wouldn’t know that consumer spending has held up judging by the performance of Procter & Gamble’s (NYSE:PG) stock. The consumer goods company behind Tide laundry detergent and Gillette razor blades closed out 2023 with its share price down 3% on the year.
Today, PG is trading at the same level it was when the pandemic struck in 2020. The company managed to keep its earnings strong over the past year largely by raising prices in tandem with inflation.
But the strategy of increasing prices appears to have now hit a wall. The company’s overall sales volumes have declined for several quarters. Also, company executives have acknowledged that consumers continue to seek out cheaper generic alternatives as inflation had persisted last year. In late 2023, PG said it plans to scale back price increases on its name brand items, a move that is expected to impact future financial results. Those names include Crest toothpaste and Pampers diapers.
On the date of publication, Joel Baglole held a long position in DIS. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.