The Dow Crashed 4,260 Points in 3 Days: Here Are 3 Dow Stocks That Make for No-Brainer Buys Right Now

Long before the S&P 500 became Wall Street’s benchmark index, the iconic Dow Jones Industrial Average (^DJI 1.56%) was viewed as the best barometer of the stock market’s health. Since its inception in May 1896, the Dow has evolved from a 12-stock, industrial-focused index to one that now houses 30 time-tested, multinational companies.

But even mature businesses aren’t spared during periods of heightened stock market instability.

From April 3 through April 7 (a span of three trading sessions), the ageless Dow declined by 4,260 points, which equates to a 10.1% drop. The Dow Jones was already firmly in correction territory, but has now entered into the “crash” conversation.

Historically, elevator-down moves in the Dow Jones Industrial Average have signaled surefire buying opportunities for long-term investors. Although it’s impossible to forecast ahead of time when stock market crashes will begin, how long they’ll last, or how steep the ultimate decline will be, what history does teach investors is that recurringly profitable, time-tested businesses with well-defined competitive advantages rise in value over the long run. This makes the Dow Jones Industrial Average a stomping ground for seeking out bargains during a crash.

What follows are three Dow stocks that make for no-brainer buys right now.

Visa

The first Dow component that stands out for all the right reasons during the stock market’s steepening sell-off is payment-processing kingpin Visa (V 2.76%). Despite the growing likelihood of a recession taking shape in the U.S., Visa offers a number of reasons for long-term investors to (pardon the pun) take the plunge.

One of the more logical reasons to own shares of Visa is because it’s able to take advantage of the nonlinearity of economic and investing cycles. This is to say that, while economic downturns and stock market crashes are normal and inevitable, they’re both, historically, short-lived.

Since the end of World War II, the typical recession has resolved in about 10 months, whereas the average period of expansion has gone on for around five years. A business like Visa that thrives on growth in consumer and enterprise spending is going to disproportionately benefit from these long-winded periods of expansion.

Visa’s spot atop the payment processing pedestal is also incredibly safe. In 2023, Visa accounted for $6.445 trillion in credit card network purchase volume in the U.S., according to eMarketer, which is far more than America’s other major payment facilitators on a combined basis. Merchants seek out Visa for its leading payment network, which is what helps sustain its double-digit growth rate.

Don’t overlook its opportunity outside the U.S., either. Most rapidly growing emerging markets are still chronically underbanked, which provides Visa a sustained opportunity to organically or acquisitively enter these markets to offer its payment solutions.

Lastly, since Visa went public in March 2008, it’s experienced only one notable drawback beyond 30% from its all-time high. With Visa’s stock retracing as much as 17.6% (on an intra-day basis) below its all-time closing high during this three-day crash in the Dow, it marks an opportune entry point for patient investors wanting to own the best-of-the-best in the payments space.

Johnson & Johnson

A second Dow component that makes for a no-brainer buy following a three-day, 4,260-point wash-out in Wall Street’s ageless index is healthcare conglomerate Johnson & Johnson (JNJ 1.94%). While the overhang of cancer lawsuits pertaining to J&J’s now-discontinued talcum-based baby powder have weighed on shares, there are ample reasons to believe the future is bright.

To state the obvious, people don’t suddenly stop becoming ill or requiring medical care just because Wall Street or the U.S. economy hits a rough patch. Demand for brand-name drugs and medical devices is consistent in virtually any economic climate, which leads to highly predictable operating cash flow year after year.

What’s really helped Johnson & Johnson deliver rock-solid operating results is its emphasis on pharmaceuticals. Despite novel drugs having a finite period of sales exclusivity, the margins and growth potential associated with brand-name therapies is well ahead of J&J’s other operating segments.

This is also a good time to mention that Johnson & Johnson’s medical technologies segment is ideally positioned to benefit from an aging domestic and global population. Growing demand for med-tech solutions as the domestic and global population ages should translate into better pricing power and juicier margins for J&J.

Investors shouldn’t worry too much about J&J’s lawsuits, either. It’s one of only two public companies that possesses the highest possible credit rating (AAA) from Standard & Poor’s. Having a higher credit rating than the U.S. government implies there’s no concern about J&J’s ability to service and eventually repay its debt obligations.

But maybe the best aspect about Johnson & Johnson is its leadership continuity. In 139 years, it’s had only 10 CEOs. This lack of a revolving door in the executive suite ensures that growth initiatives remain on track.

Shares of Johnson & Johnson can be scooped up right now for 13.6 times forecast earnings per share in 2026. For context, this equates to a 15% discount to its average forward-year earnings multiple over the last half-decade.

Walt Disney

The third Dow stock that makes for a no-brainer buy amid a 4,260-point wipeout in Wall Street’s 129-year-old index is media giant Walt Disney (DIS -0.36%). Although this decade has been mired with ups-and-downs from the COVID-19 pandemic and the company’s hit-and-miss movies, Walt Disney brings clearly identifiable competitive advantages to the table that are too enticing for smart, long-term investors to pass up.

The most-important edge for Disney is the company’s brand. Though there are plenty of movies to watch and theme parks to visit, no other entertainment company offers the depth of storytelling or has the engageable characters that Walt Disney has. This has helped it transcend generational gaps for decades.

Being irreplaceable dramatically increases Disney’s pricing power, as well. Whereas an adult ticket to Disneyland in Southern California ran $1 in July 1955, the cheapest entry-level ticket these days on non-peak-demand days is $104. In other words, admission price inflation has nearly 10X’d the real rate of inflation in the U.S. since 1955. This type of pricing power, coupled with the incredible brand loyalty of its customers, has driven its profitability higher over many decades.

Walt Disney also deserves credit for the eye-popping ascent of its direct-to-consumer segment. Ramping Disney+ from the ground up to recurring profitability wasn’t easy, but Disney managed to reach this point in record time. The introduction of ad-supported streaming tiers has spoken to cost-conscious consumers, while the company’s brand power has helped it raise prices on numerous occasions.

Not to sound like a broken record, but Disney is another company that benefits from the nonlinearity of economic cycles. With downturns being short-lived, Disney typically sees everything from theme-park revenue to advertising and moviegoing increase during long-winded economic expansions.

The final reason investors won’t be disappointed buying shares of Walt Disney is its historically cheap valuation. Its sub-14 forward price-to-earnings ratio works out to a 47% discount to its average forward-year earnings multiple over the last five years.