Wall Street believes these 4 Dow stocks will lead the index after one of its best months ever

Published Mon, Oct 31 20221:14 PM EDTUpdated Mon, Oct 31 20222:17 PM EDT

As the Dow Jones Industrial Average climbs to its best month in decades, investors may be looking for the stocks poised to continue the upward momentum. The 30-stock index has been on a tear in October. It notched a four-week winning streak for the first time since November 2021 and is up 14% on the month. If the gains hold Monday, it will be the best month for the index since 1976. The S & P 500 and tech-heavy Nasdaq are also up for the month but lagging the Dow. The S & P 500 is up more than 8% in October, while the Nasdaq is up more than 4%. To screen for stocks that will lead the Dow going forward, CNBC Pro looked at all members of the index and sorted out those where at least 70% of analysts covering have a buy rating. Then CNBC Pro found the stocks that have at least 10% upside to the consensus target price. The stocks set to lead the Dow That yielded four stocks well-known to investors. Microsoft, the stock with the highest share of analysts that say to buy the company, has a more than 26% upside to its consensus target price. The stock is also trading at a bit of a discount — shares are down more than 2% on the month and more than 30% on the year as the technology sector has been hit by the threat of recession and higher interest rates. Shares slipped last week when the company released earnings that included a weaker-than-expected forward guidance even though Microsoft beat on top and bottom lines in its last quarter. Still, analysts covering the company are bullish on its future. Analysts at Goldman Sachs cut their near-term earnings estimates and price target slightly but see changes that the company is making as beneficial in the long term. "Looking beyond near-term dynamics, we remain constructive as we see the company well positioned to continue to win deals and expand its wallet share within its existing customer-base, even in a slower growth environment," wrote analyst Kash Rangan in an Oct. 25 note. The next company on the list, Salesforce, has the highest upside to its consensus price target — analysts see it gaining more than 32%. It also has a 78% buy rating and gained more than 8% last month. It also has an activist investor stamp of approval. In mid-October, Starboard Value revealed it had taken a significant stake in the company , saying that there is still significant opportunity for the enterprise software maker. Shares traded higher on the news. Visa, the credit card company, had the largest one-month gain of the group, with shares up more than 16% in recent weeks. Shares of the company jumped when it announced its quarterly earnings, where it beat Wall Street's expectations on both the top and bottom lines. Analysts see the company gaining even more — more than 71% covering Visa have a buy rating on shares, with an average upside of 18.4%. The Walt Disney Company rounds out the list. More than 71% of analysts covering the company have rated it a buy and see a 29% upside to price targets. The company in August reported solid quarterly earnings that beat on the top and bottom lines. In addition, Disney+ subscriptions rose to 152.1 million, much more than the 147 million analysts expected, according to StreetAccount. Disney also announced that it would add an advertising tier into its pricing structure for its streaming service. Correction: A previous version of this story misspelled analyst Kash Rangan's name.