Coming off of a volatile first half of the year, the Dow Jones Industrial Average (DJIA) index closed June with a 1.8% loss year-to-date (YTD), its worst performance over that period in eight years, as reported by CNBC. As the blue chip index trades down another 0.3% as of Monday afternoon, investors are looking for picks that can withstand heightened uncertainty such as the global trade fears, rising interest rates and broader geopolitical unrest that have dragged on many of America's largest corporations.
In an interview with CNBC's "Trading Nation," Michael Bapis, partner and money manager at the Bapis Group at HighTower Advisors, highlighted a handful of Dow component companies that he views as positioned to outperform the broader market in the longer term. Bapis expects chipmaker Intel Corp. (INTC), Big Bank play JPMorgan Chase & Co. (JPM) and pharmaceutical giant Merck & Co. (MRK) to offer solid returns by year-end.
Intel, down about 10% over the most recent 30 days, is set to rise to the top again, according to the money manager. He views the recent pullback as driven by overdramatic trade war fears, and talks between the U.S. and China. Bapis recommends that investors look back to Intel's strong fundamentals, including a deep product pipeline, "which is driving earnings growth."
Picking Winners for the Second Half
Bapis Group foresees Merck, the second-best-performing Dow stock over the most recent three months, as a standout pick within health care, as reported by CNBC. Within financials, he likes JPMorgan, which has seen its stock fall 2.5% amid broader weakness in the sector.
Gina Sanchez, CEO of Chantico Global, points to plays in the beaten-down consumer staples and utilities sectors, highlighting energy generation and delivery company Exelon Corp. (EXC). The stock has gained 8.5% YTD. Based on this strategy, investors may look to Coca Cola Co. (KO), Johnson & Johnson (JNJ) and Procter & Gamble Co. (PG), which all posted losses in the first half of 2018.
Home Depot Inc. (HD), down 2.2% YTD on Monday afternoon, could also stage a comeback as rising interest rates keep people in their existing homes longer, leading to more renovations and revenue streams for the retailer. McDonald's Corp. (MCD) bulls, including RBC's David Palmer, view the Street's disappointment regarding the global fast food behemoth's new value menu as overly pessimistic. Meanwhile, analysts have applauded Apple Inc. (AAPL) on its shift away from relying on hardware sales to building out its burgeoning software and services business such as Apple Music and the App Store. (See also: 5 Reasons Apple Stock Is a Buy: Citigroup Analysts.)