Is It Time to Buy August’s Worst-Performing Dow Jones Stocks?

The Dow Jones Industrial Average rose 1.8% in August. That’s a great performance, especially considering the widely followed index is up about 8.5% year-to-date.

However, several Dow stocks fell last month. Is It Time to Buy August’s Worst-Performing Dow Jones Stocks?

1. Intelligence

Intel (INTC -8.80%) stood out by far as the worst Dow stock last month. Shares of the chipmaker fell 28% in August and are down nearly 60% in 2024.

What’s behind Intel’s malaise? Much of this is caused by changing market dynamics, with significantly increased competition. Revenues and earnings are down. The company plans to suspend its dividend in the fourth quarter. Intel is cutting costs, cutting its workforce by more than 15%. Some investors are concerned that these cost-cutting efforts will include throwing in the towel on building a new chip manufacturing plant in Germany.

The picture looked even worse just a few days ago. However, Intel shares rebounded somewhat after news reported that the company is evaluating a spinoff of its manufacturing operations from its core chip design business.

Is Intel stock a good pick for investors looking for upside opportunities? Maybe, but I think the safest move is to sit on the sidelines for now. Intel competes in a highly competitive industry where the company’s central processing units (CPUs) have lost ground to graphics processing units (GPUs).

2. Chevron

Chevronhis (CVX -2.22%) performance in August was nowhere near as bad as Intel’s. However, the oil and gas giant’s shares still fell 7.8% last month. Chevron stock is also down slightly year to date.

It didn’t help that Chevron’s second-quarter earnings, which were reported on Aug. 2, fell short of Wall Street’s expectations. Investors are also worried about the pending acquisition by Chevron Hess. This deal is important for Chevron as it would greatly expand and diversify the company’s portfolio and production capacity. An arbitration panel plans to hold a hearing in 2025 to address an issue related to ExxonMobilthe challenge related to a joint venture in Guyana.

However, Chevron management remains confident that the Hess deal will close. More importantly, the company should be able to generate strong earnings and free cash flow growth over the long term regardless of what happens with this acquisition.

I think Chevron is a great pick to buy on the dip for income investors. The company’s forward dividend yield was 4.4% at the end of the trading session on Tuesday. Chevron has increased its dividend payout for 37 consecutive years.

3. Amazon

Amazon (AMZN -1.26%) the stock skyrocketed 80% last year. Shares of the e-commerce and cloud services leader set to outperform the Dow Jones industrial average in 2024. However, August was a down month for Amazon, with shares down 4.5% — enough to become the third-worst performer in the Dow ranking. .

You can blame Amazon’s August decline on its Q2 update. The company missed analysts’ revenue estimates. Its third-quarter earnings guidance was also below expectations.

I think these are just short-term issues resulting from customers still feeling the sting of inflation and focusing more on lower-priced products. But inflation is moderating. Amazon’s core business remains strong. And the key is that the migration to the cloud — where Amazon is leading the industry, through Amazon Web Services (AWS) — is still in its infancy. Most global information technology (IT) spending still goes to traditional on-premises equipment and infrastructure. Over the next 10 to 15 years, this spending should shift increasingly toward cloud-based solutions, with AWS poised to be one of the biggest beneficiaries.

We are also talking about a company that is continuously finding new markets to enter. Another one should be just around the corner. Amazon CEO Andy Jassy said on the second-quarter conference call that the company will begin shipping production satellites later in 2024. He added that management believes “this could be a very big deal for us”.

Is Amazon a Dow stock to buy on the decline? Absolute.