4 Dow Jones Stocks Near 52-Week Highs That Are Still Worth Buying in July

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4 days ago

Nvidia and Microsoft are leading the tech sector to new heights for all the right reasons.
Honeywell is an industrial leader that could benefit from AI integration.
American Express cardholders continue to spend despite overall consumer pressures.
10 stocks we like better than Nvidia ›
The Dow Jones Industrial Average is sometimes viewed as a low-growth, value-focused index. But the Dow has modernized -- adding Nvidia (NASDAQ: NVDA), Amazon, and Salesforce over the last five years.
The index contains 30 industry-leading components, many of which are in the industrial, tech, and financial sectors. These sectors have been leading the broader market to new heights, as they benefit from economic growth and capital spending.
Plenty of Dow stocks are hitting 52-week highs, but four that stand out are Nvidia, Microsoft (NASDAQ: MSFT), Honeywell International (NASDAQ: HON), and American Express (NYSE: AXP). Here's why these Dow stocks are worth buying in July.
Nvidia is up 48.7% in the last three months -- more than making up for its tariff-induced sell-off. The stock has blasted past $4 trillion in market cap to an all-time high. Investors may be wondering if the red-hot stock will eventually cool off because it has gone up so much. But instead of looking solely at the price action, a better way to approach Nvidia is to follow artificial intelligence (AI) spending.
A big reason why Nvidia recovered so quickly from its April lows is earnings reports from big tech companies like Microsoft and Meta Platforms that showed a steadfast commitment to AI spending despite (what was then) the threat of a looming recession or economic slowdown.
As long as customers keep lining up in droves to buy Nvidia's products and AI solutions, the company will probably keep growing earnings and justify its valuation. Nvidia looks expensive based on trailing earnings, but the valuation is reasonable if it can sustain a high growth rate and margins.
Nvidia will report its fiscal 2026 second-quarter results on Aug. 27. Analyst consensus estimates forecast Nvidia earning $4.29 in fiscal 2026 earnings per share (EPS) and $5.76 in fiscal 2027 EPS. That would give it a price-to-earnings (P/E) ratio of 38.4 based on the stock price at the time of this writing divided by its fiscal 2026 forecast -- and just 28.6 based on its fiscal 2027 forecast.
In other words, if Nvidia's stock price went nowhere and earnings came in as expected, the stock would feature a rather inexpensive valuation in less than two years. That's not a bad setup for investors with long-term time horizons.
Of course, earnings could get derailed for a number of reasons, such as tariffs, an economic slowdown, a drop in key spending by top customers, or competition. Still, even at an all-time high, it's a worthwhile growth stock to buy and hold for patient investors with a high risk tolerance.
Microsoft is in a similar boat to Nvidia. The company is within striking distance of a $4 trillion market cap and is crushing the S&P 500 year to date. But the fundamentals are intact to make the stock a solid long-term buy-and-hold candidate.
Microsoft has a trailing-12-month operating margin of 45.2%, which is significantly higher than its historical average. The following chart showcases the power of revenue growth paired with margin expansion -- which leads to strong earnings.
Microsoft is growing revenue and margins at a breakneck pace, due in part to its effective integration of AI across its business from cloud computing through Azure to application software for consumers and enterprises.
Microsoft isn't growing revenue nearly as quickly as Nvidia, but investors are still willing to pay a premium price for the stock due to the quality of its earnings growth. Microsoft also pays a growing dividend and buys back enough stock to offset stock-based compensation, which avoids diluting existing shareholders.
Microsoft is a well-rounded company, but its stock price has run up a lot. Still, it's worth owning for patient investors because Microsoft has a clear runway for growing into its valuation over time.
Honeywell's stock price had been languishing for years, but it has recently broken out to an all-time high. A couple of factors are at play.
The first is that Honeywell is splitting into three new companies by the second half of 2026. The idea is that splitting up the company will make it more focused and innovative, leading to improved earnings growth. Honeywell's earnings have grown at a sluggish pace for the last decade as the company has largely failed to capitalize on exciting growth trends like the industrial Internet of Things. In the form of three separate businesses -- specialty chemicals and materials, aerospace, and automation -- Honeywell could create more shareholder value.
Another reason to be excited about Honeywell is AI's impact on the industrial sector. There's been a lot of focus on the rebound in tech and growth stocks, but industrials is the best-performing sector year to date with a 14% gain. The sector stands to benefit from AI by providing the infrastructure needed to support data centers and by using AI to reduce costs and drive higher margins.
Honeywell is a good example of a company that could integrate AI to improve its operations. But Honeywell could also be a leader in industrial AI through product integrations.
AI is taking Honeywell Forge to the next level. Launched in June 2019, Honeywell Forge is a data-driven Internet of Things software platform that gives customers insights into their physical assets, cybersecurity, supply chains, and more. Through Forge, Honeywell stands to benefit from increased AI adoption in the industrial sector.
Honeywell sports a fairly reasonable P/E ratio of 27.1 and a growing dividend, with a 1.9% yield and 14 consecutive years of boosting the payout.
American Express is up 83% in the past two years. And a big reason why is that its business model continues to thrive under the current economic conditions.
American Express caters to affluent clients, offering generous cardholder perks in exchange for high annual cardholder fees and generally higher fees on merchants than Visa and Mastercard. American Express spends a lot on card member rewards, but overall the expense is worth it as American Express incentivizes cardholders to use their cards for as many purchases as possible to justify the high fees.
The company acts as both the payment processor and the issuer of its own cards; by contrast, Visa and Mastercard partner with banks to issue cards. American Express' business model is riskier, but it also comes with higher potential rewards, so long as the company handles risk well by only taking on customers who can manage their spending.
American Express is yet another example of a high-margin company with strong earnings growth to buy even at an all-time high.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. American Express is an advertising partner of Motley Fool Money. Daniel Foelber has positions in Nvidia. The Motley Fool has positions in and recommends Amazon, Mastercard, Meta Platforms, Microsoft, Nvidia, Salesforce, and Visa. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
4 Dow Jones Stocks Near 52-Week Highs That Are Still Worth Buying in July was originally published by The Motley Fool