S&P Dow Jones Indices is shaking things up, adding three new components to the Dow Jones Industrial Average, the benchmark index for the SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA).
As of September 23, Goldman Sachs (NYSE: GS), Visa (NYSE: V) and Nike (NYSE: NKE) will join the Dow index, replacing Bank of America (NYSE: BAC), Hewlett-Packard (NYSE: HPQ) and Alcoa (NYSE: AA). [Revamped Dow Jones Industrial ETF to Keep ‘Quality Tilt’]
S&P Capital IQ analysts have a “Buy” recommendation on Goldman Sachs. Visa and Nike also show favorable attributes, Todd Rosenbluth, S&P Capital IQ Director of ETF Research, said in a note. Goldman Sachs could witness improved performance, which would lead to continued share repurchases. The company invests in the global capital market and is one of the best investment bankers.
Nike is making great merchandising and brand repositioning changes in China to better meet the needs of discerning and sophisticated Chinese consumers, but the company may not return to growth in China over the short-term.
“NKE’s long-term growth story remains intact,” S&P Capital IQ equity analyst Jason Asaeda said.
S&P Capital IQ equity analyst Sonia Parechanian points to Visa’s business model, high level of cash flows, healthy balance sheet and payment volume growth ahead, “given a U.S. economic recovery, aided by the secular trend toward non-cash payments and strong growth prospects in emerging markets.”
The three new additions are expected to fit well in Dow’s high-quality tilt methodology.