Prediction: 3 time-tested Dow stocks that can double your money by 2030

For the past 128 years, the iconic Dow Jones Industrial Average (^DJI -0.54%) served as a guide to help investors assess the health of the US stock market.

At its inception in May 1896, the Dow Jones was comprised of 12 companies that, unsurprisingly, were prominently linked to the industrial sector. But after more than 50 changes to this ageless index over the years, it comprises 30 diverse and time-tested multinational companies.

Image source: Getty Images.

While most Dow stocks are respective leaders in their industries and have proven their value to long-term investors, not all 30 components are created equal. For patient investors with a long-term mindset, three Dow stocks are, through a combination of competitive advantages and price dislocations, ideally positioned to double your money by 2030.

Visa

The first time-tested Dow stock with all the tools you need to double your money in the next six years is a world-leading payment processor. Visa (V -0.67%).

The biggest headwind Visa faces through 2030 is the likelihood of a US or global recession taking shape. When economic growth slows or contracts, it’s normal for consumers and businesses to cut back on spending. This is bad news for a company that generates revenue from transaction fees.

The flip side of this concern is that US recessions have historically been short-lived. All 12 U.S. recessions since the end of World War II in September 1945 have resolved within two to 18 months. In comparison, most economic expansions have lasted for several years. Over time, consumer and business spending expands, which undoubtedly benefits Visa’s core payment processing operations.

Visa also has an impressive international track. Excluding currency movements, the volume of cross-border payments is steadily increasing among young and middle-aged teenagers. This reflects the fact that fast-growing emerging markets are chronically underbanked. Visa has the deep pockets and abundant operating cash flow to push these markets organically or through acquisition.

Another saving grace for Visa was its management team’s intentional avoidance of lending activities. If Visa were to step into the lending arena, it would likely be wildly successful. However, lenders are directly exposed to loan losses and credit defaults during periods of economic uncertainty. Because it’s not a lender, Visa doesn’t have to set aside precious capital for potential loan losses and defaults. This is a subtle but fundamental advantage for the company.

If Visa can sustain a mid- to mid-single-digit revenue growth rate, a triple-digit return for patient shareholders in 2030 is highly visible.

Image source: Walt Disney.

Walt Disney

A second sensational Dow stock that has the catalysts in its sails to deliver a return of 100% or more for long-term investors through 2030 is the media magnate. Walt Disney (DIS -0.67%).

Disney faced a difficult start to the decade. The COVID-19 pandemic wreaked havoc on both its theme parks and studio segments, while its focus on growing its streaming content, including Disney+, led to significant losses. Traditional media companies have found that they emulate Netflix on the streaming side is easier said than done.

However, these headwinds began to diminish, giving way to Walt Disney’s many competitive advantages.

Perhaps the biggest story of 2024 is that Disney delivered a surprise operating profit for its streaming segment a quarter ahead of schedule. A combination of careful cost-cutting and the ability to raise prices at all levels of streaming has helped Walt Disney turn steep initial losses for its direct-to-consumer (DTC) segment into an operating profit. Look for the company’s broad content library and pricing power to fuel significant profit growth in this DTC segment moving forward.

Another key selling point for Walt Disney is its branding. Consumers have a lot of choices when it comes to the theme parks they visit and the movies they watch. However, no media company comes close to the depth of characters and storytelling that Disney brings to the table. Whether you’re five years old or 85, Disney’s wide range of products and services has a way of connecting and engaging with you. Being irreplaceable is a trait that investors will pay a premium for on Wal Street.

Investors should also be able to take advantage of the price dislocation caused by the COVID-19 pandemic and what have been significant short-term losses related to its DTC segment. After reporting $3.76 in earnings per share (EPS) in fiscal 2023 (Disney’s fiscal year typically ends at the end of September), EPS is expected to easily top $6 in fiscal 2027. Annualized growth of double-digit EPS may lift this media giant to $180 per share (or beyond) by 2030.

Intel

The third Dow stock tested at once with the puzzle pieces in place to double your money by 2030, but will certainly requires patience from investors is a semiconductor stalwart Intel (NASDAQ: INTC).

Intel has been plagued by a myriad of issues, including Advanced microdevices siphoning off some of the central processing unit (CPU) market share for personal computers (PCs) and traditional data centers. Nvidia also blew it out of the water with its H100 graphics processing units (GPUs), which are the preferred choice for companies operating compute-intensive data centers.

Additionally, Intel is in the process of building its foundry services segment from the ground up. Its ambitions to become the No. 2 in the world by the end of the decade is ambitious but extremely expensive. The more money they poured into building this much-needed infrastructure, the more painful it was for Intel’s bottom line.

These headwinds facing Intel will not lift. But there is light at the end of the tunnel for long-term investors.

For example, Intel’s legacy operations still generate plenty of operating cash flow. Even after losing CPU share to AMD, Intel remains the undisputed leader in PC CPU share. While this won’t be the fastest-growing segment going forward, it should provide a healthy cash flow that Intel can put to work on higher-growth initiatives.

Intel is also releasing its artificial intelligence (AI) accelerator chip Gaudi 3, which gives it an opportunity to take action from Nvidia. Even though Nvidia GPUs are likely to remain superior when it comes to computing power, Intel’s much cheaper chips should help it stand out in an environment where enterprise demand for AI GPUs is a overwhelming offer.

With Intel shares trading at their lowest price-to-book value in at least four decades — currently 28% below book value — this price dislocation can no longer be ignored by opportunistic investors.