Since the rebound from the global financial crisis in 2009, the Dow Jones Industrial Average (DJIA) has finished down for the year on only two occasions. With the widely followed index down around 8% year-to-date, the potential for a third such occurrence is looming.
Yet not all Dow-30 members have had such slumps.
Over the past decade, only a pair of Dow stocks have finished in the green in every calendar year. A few months from now, we’ll learn which one, if either, kept their streak going.
It’s not exactly neck-and-neck, though.
This race features a steady health care frontrunner and a dynamic technology longshot. One looks to be on its way to an incredible 15th straight up year. The other is down significantly but gaining ground.
But given how volatile markets can get down the stretch, it’s still anyone’s game!
Let’s meet the contenders.
Which Dow Stock Has the Longest Active Winning Streak?
Like most stocks, UnitedHealth Group (NYSE: UNH) had a brutal 2008. It’s 54% plunge was one of the worst in the Dow. But it hasn’t looked back since.
The nation’s leading health care plan provider has had a positive annual return from 2009 to 2021, a feat no other Dow component can claim. All but one has been of the double-digit variety including last year’s 43% climb. Up a more modest 7% this year, UnitedHealth has the inside track to retain the benchmark’s longest-standing winning streak.
Whether or not it can cling to the positive territory will partly depend on where the broader market goes from here but also the company’s third-quarter report. If the first half financial results are any indication, we could be in for another strong performance.
UnitedHealth handily beat the consensus EPS estimates in both Q1 and Q2, an event that has been commonplace during the stock’s unbelievable run. The bar will be higher going forward, however, after management raised its full year adjusted EPS guidance to $21.65 at the midpoint which implies 15% growth. However, the two dozen analysts that cover the stock are currently expecting that figure to be near the high end of management’s range ($21.90).
While the stock’s fortunes for the remainder of the year will largely depend on continued strength in the managed care and Optum businesses, there may be a wild card here. UnitedHealth hasn’t done a stock split since 2005. And with the share price north of $500, some are suggesting another 2-for-1 split or greater is overdue (albeit at the cost of losing its top weighting in the Dow). If this happens over the next few months, it could attract more investors to the stock and clinch an amazing 15th straight year in the green.
Will Microsoft’s Winning Streak Be Snapped in 2022?
Microsoft (NASDAQ: MSFT) is the only other Dow-30 stock that has booked a positive return in each of the last 10 years. The software giant’s share price has ballooned from approximately $26 at the end of 2011 to around $289 presently. In other words, investors that bought the stock 10 years ago have witnessed a 10-bagger not to mention some nice dividend payouts along the way.
It's been an even longer time since Microsoft enacted a split. After a 2-for-1 split in February 2003, the company has kept the stock on autopilot watching it soar as high as $349.67 in November 2021. It’s been an uncharacteristically tough year for the Microsoft with results hurt by a slowdown in the cloud business, weaker Xbox sales, and the strong dollar. While it has rebounded from its 2022 lows, the stock’s minus-14% year-to-date return has its decade-long winning streak in serious jeopardy.
A stock split could prove to be the streak’s saving grace especially if it's of the magnitude that mega cap tech peers like Amazon and Alphabet have recently completed. A 20-for-1 split would push Microsoft’s share price into the teens and undoubtedly attract retail interest.
Absent a heroic split, Microsoft may have the catalysts of its own to bring it back above water for the year. The current quarter’s earnings are expected to be the company’s best of the calendar year as CEO Satya Nadella’s shift toward the more lucrative enterprise cloud business takes further effect. With so many businesses around the world in the early stages or yet to make the digital transformation, Microsoft’s long-term growth prospects look healthy regardless of the near-term results and stock performance.
Still, if Microsoft is to finish in the green, it would only seem to help that virtually every analyst on the Street is calling this year’s downturn a buy opportunity. Since its latest quarterly update, a perfect 18 of 18 analysts have reiterated buy ratings with several price targets well into the $300’s.
If Microsoft can build off the current momentum, it just may eke out a gain for the year with the target to pass $336.32. This means the stock has to rally another 17% by New Year’s Eve to clinch a celebration. And if the market happens to rally strongly (and/or tech exerts market leadership) Microsoft’s volatility and beta advantages over UnitedHealth, could produce an epic come-from-behind win.