While the Dow Jones (^DJI) represents industry leaders, not every stock in the index is a safe bet. Some are facing headwinds like declining demand, rising costs, or disruptive new competitors.

Just because a company is in the Dow Jones doesn’t mean it’s a great investment, and StockStory is here to help you separate winners from laggards. Keeping that in mind, here are two Dow Jones stocks that could be good additions to your portfolio and one that may face some trouble.

One Stock to Sell:

Caterpillar (CAT)

Market Cap: $322.9 billion

With its iconic yellow machinery working on construction sites, Caterpillar (NYSE: CAT) manufactures construction equipment like bulldozers, excavators, and parts and maintenance services.

Why Are We Wary of CAT?

1. Products and services are facing end-market challenges during this cycle, as seen in its flat sales over the last two years
2. High input costs result in an inferior gross margin of 29.2% that must be offset through higher volumes
3. Earnings per share have contracted by 5.2% annually over the last two years, a headwind for returns as stock prices often echo long-term EPS performance

Caterpillar is trading at $694.70 per share, or 30.6x forward P/E. To fully understand why you should be careful with CAT, check out our full research report (it’s free).

Two Stocks to Watch:

Amazon (AMZN)

Market Cap: $2.23 trillion

Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ: AMZN) is the world’s largest online retailer and provider of cloud computing services.

Why Does AMZN Stand Out?

1. Amazon revolutionized the way consumers shop. This isn’t the only tailwind to its impressive revenue growth, as its highly profitable AWS segment has also driven top-line momentum.
2. The company's best-in-class revenue growth coupled with modest operating leverage on its past infrastructure investments has led to elite EPS growth over a multi-year period.
3. Though dominant, Amazon's capital-intensive e-commerce business means its profitability is structurally lower than its pure-play tech peers. Can the company pull it up, or are we reaching a ceiling?

Amazon’s stock price of $207.30 implies a valuation ratio of 27.4x forward price-to-earnings. Is now the time to initiate a position? See for yourself in our full research report, it’s free.

Goldman Sachs (GS)

Market Cap: $241.2 billion

Founded in 1869 as a small commercial paper business in New York City, Goldman Sachs (NYSE: GS) is a global financial institution that provides investment banking, securities, asset management, and consumer banking services to corporations, governments, and individuals.

Why Are We Positive On GS?

1. Annual revenue growth of 12.3% over the last two years beat the sector average and underscores the unique value of its offerings
2. Share repurchases have amplified shareholder returns as its annual earnings per share growth of 49.9% exceeded its revenue gains over the last two years
3. Management team has demonstrated it can invest in profitable ventures through its 12.7% five-year return on equity

At $781.25 per share, Goldman Sachs trades at 13.4x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively.

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.