The proverbial planets are aligning for each of their underlying companies.
The Dow Jones Industrial Average (^DJI -0.37%) hasn't been the stock market's go-to index for a long, long time. It's since been replaced by the broader S&P 500 (^GSPC -0.28%), and for tech-minded growth investors, the Nasdaq Composite (^IXIC -0.34%). For some investors, the 30 hand-picked stocks that make up the Dow make it too narrowly focused to serve as a barometer of the market's overall health.
Nevertheless, some of the Dow Jones' constituents are underestimated and subsequently ready to outperform. Here's a closer look at three of them that are likely to do so sooner than later, and for a while.
Image source: Getty Images.
1. Apple
There's a reason Apple (AAPL -0.84%) shares started the year out on the wrong foot, tumbling from December's peak near $256 to April's low of $188. That's the company's failed foray into the artificial intelligence (AI) era. Although hopes were high when Apple Intelligence was officially launched in October of last year, it failed to impress. It didn't inspire a swell iPhone upgrades either. For all intents and purposes, Apple was forced back to the drawing board to rethink and rebuild its entire AI offering.
There's also a reason, however, Apple shares have since reclaimed all the ground lost shortly after the company's disappointing entry into the artificial intelligence race. That is, consumers may not have been any more ready than Apple was to wade into AI waters, preferring to let the usual first-generation technology kinks get worked out. Now both sides of the table are ready.
Nowhere is this idea more evident than in recent reports of firm demand for Apple's onboard-AI-capable iPhone 17. Although the company won't officially confirm it until releasing its quarterly numbers in late October, Bank of America, JPMorgan (JPM 0.22%), and Wedbush (along with several others) all agree that demand for the newest version of the popular smartphone is quite strong even without all of Apple's artificial intelligence improvements in place yet. The updated version of AI-powered digital assistant Siri, for instance, won't be available until spring of next year.
And despite the company's slow start on this front, the long-term opportunity is still tremendous. Straits Research suggests the global generative artificial intelligence market that Apple Intelligence serves could be worth more than $200 billion by 2033, growing at an average annual pace of 32% between now and then to get there.
Of course, consumers who utilize their iPhone for Apple's AI solutions will also fuel growth of the company's high-margin Services arm.
2. Johnson & Johnson
As has been the case with most other pharmaceutical stocks, Johnson & Johnson (JNJ 0.01%) shares have struggled since 2022. Although it was a win for everyone living on the planet, the taming of the COVID-19 pandemic has proven problematic for the drug business. Sales of J&J's COVID vaccine simply fell off a cliff, so to speak, but the contagion itself stymied the continued development of its pipeline. The stock's performance simply reflected this headwind.
Like Apple shares though, there's a reason Johnson & Johnson stock has fought its way back from the multi-year low reached in early 2025 to test its 2022's highs. That is, many of the developmental efforts delayed by the pandemic are now back on track. And they're promising to be sure. In fact, J&J aims to be doing $50 billion in annual oncology drug sales alone by 2030.
That's not seemingly huge compared to this year's expected total top line of more than $90 billion, some of which is already cancer-related revenue.
It's coming, though. For perspective, that's more than three times the consensus estimate of the company's oncology revenue for 2028. Approvals of drugs like its bladder cancer treatment TAR-200 and the combination of Rybrevant and Lazcluze as a treatment for non-small cell lung cancer will push the company toward that goal, although they're still just the beginning. At one point, the company argued it would have at least 10 different drugs each generating more than $5 billion in yearly sales by that point, with another 15 drugs each producing at least $1 billion in annual revenue by then.
J&J hasn't reaffirmed those specific numbers in 2025. The majority of the oncology drugs like Talvey and Tecvayli being touted at the time, though, are still in the company's developmental pipeline. Indeed, the company's got 18 cancer drug trials currently in phase 3 testing, plus another eight now in the FDA's hands for potential approval.
And that's just cancer. All told, Johnson & Johnson has more than 100 drug trials underway.
The point is, this iconic pharmaceutical company has been busier of late than given credit for by the market.
3. JPMorgan Chase
Finally, add mega-bank JPMorgan Chase (JPM 0.22%) to your list of Dow stocks that could soar before the end of this year, and continue doing so well after. It's already doing so, in fact, rallying nearly 200% from its 2022 low to this month's record high. But since it's priced at only 16 times this year's expected per-share earnings of $19.44, there's room for more upside.
And there's also reason to expect it.
Despite the stock's steady forward progress over the course of the past three years, it hasn't exactly been a time of great growth for any aspect of the banking business. JPMorgan's expected top line of $180 billion for 2025 is only about 1% better than last year's sales, for perspective, while earnings are likely to fall just a bit from 2024's bottom line. Economic lethargy and an uncertain future are the key culprits.
There's hope on the horizon, though. After being put on hold while waiting for more certainty, companies are finding they can't wait any longer to make acquisitions or complete mergers. That's why JPMorgan rival Goldman Sachs expects worldwide M&A volume to reach a record-breaking $3.9 trillion next year.
It's already starting to take shape, in fact. As Goldman noted in its M&A outlook for the second half of 2025, “We believe we're in the second year of a five-to-seven-year M&A market recovery. As corporates and sponsors work through and out of disruption, we expect key drivers to propel dealmaking through year-end.”
A recent interest rate cut (and likely more to follow) of course will only fan these flames, now that it's become clearer that tariffs won't necessarily inflict as much damage on the global economy as initially feared.
Mergers, acquisitions, public offers, and take-privates are a bigger business to Goldman Sachs than they are to JPMorgan Chase, which also operates a consumer-facing banking business. All the money industries are interrelated, though. So, what's directly good for JPMorgan's underwriting business is at least indirectly good for its other arms.
