The Dow Jones Industrial Average didn’t have the big February, falling 4.2%. However, a few companies in the index defied these trends.
JPMorgan Chase (JPM 2.57%), American Express (AXP 3.98%)and Cisco Systems (CSCO 1.32%) all beat the average, although Cisco was still down for the month. So should you buy any of these stocks right now? Let’s find out.
With JPMorgan up 2.7% in February, it took the crown as the best-performing Dow Jones stock. The largest US bank by assets didn’t have much news in February when it reported earnings for January. However, JPMorgan outperformed The financial sector SPDR ETF with 5% in February, which shows how strong it is compared to other banks.
When JPMorgan reported its fourth-quarter financial results in January, JPMorgan delivered a strong quarter, with earnings up 7% to $3.57 per share. Management also discussed only including a mild recession in the guidance, which is an improvement over what investors heard in October.
Thanks to its legendary CEO, Jamie Dimon, JPMorgan remains the industry’s best-run bank. With the stock trading right at its historical price-to-earnings valuation of 11.8 times earnings, if you’re looking for exposure to the banking industry, you could do a lot worse than JPMorgan, especially with its attractive 2.8% dividend yield.
American Express also made the January list of top-performing Dow Jones stocks, so repeat results are impressive. Although it did not have earnings as a catalyst in February, it still managed to return 0.2%.
Until halfway through the month, the stock was up nearly 4% before falling. That optimism was likely a result of its strong guidance for 2023, as management predicts revenue will grow 16% and earnings per share (EPS) will go from $9.85 to $11.20. Nothing about this estimate has changed, but market sentiment has, as American Express’ performance turnaround coincides directly with the Dow Jones performance.
Thanks to the weak sales, American Express trades for 16 times forward earnings, which is right in line with its historical average. American Express’s latest results shouldn’t distract investors from its 2023 guidance. If it hits estimates, American Express will be an outstanding stock to own in 2023.
On February 15, Cisco reported earnings, and the market loved them so much that it sent the stock up 5% the next day. While the stock has declined since then, this market reaction landed Cisco on the list of the best Dow stocks in February.
In the second quarter of fiscal year 2023 (ending January 28), revenue increased by 7%. However, what excited investors was guidance for 12% growth in Q3 and 10% growth for the full financial year. If it follows this guidance, it will mark the best quarterly performance for Cisco in over a decade.
The stock is likely to continue to do well if Cisco meets the goals management has set for it. However, the stock is trading at 18 times earnings, which is a bit expensive, considering that Cisco has historically not performed well. Although Cisco had a good month, investors should consider other technology stocks before buying Cisco stock.
American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Keithen Drury has no position in any of the shares mentioned. The Motley Fool has positions in and recommends Cisco Systems and JPMorgan Chase. The Motley Fool has a disclosure policy.