Alcoa Inc. (NYSE: AA) is basically right back where it was a year ago. This expected upside appears to be even less than it was a year ago, as analysts now have a consensus target of $10.41. That would represent upside of 20.3% from the current $8.65 share price. For Alcoa, the challenges and the opportunities are often the same. The company keeps suggesting that the aluminum market will double on a global basis by 2020. Alcoa is the smallest of the DJIA stocks in market value, with a $9.5 billion market cap. Due to its very low share price, it also impacts the DJIA the least. Alcoa’s dividend yield is also on the low side at only 1.4%.
General Electric Co. (NYSE: GE) is the conglomerate with the most upside in the 30 DJIA stocks. After closing at $20.99 in 2012, analysts see upside of some 17.7% to the consensus price target of $24.71. That target is also above the 52-week high of $23.18, and GE now pays a 3.7% dividend yield. With a dividend that is 1% higher than other DJIA conglomerates, and with so many units it can still spin off, GE might not just make it to the target. Longer term, this could recover to $30, if the United States avoids a recession and if Europe and Asia can reach the end of their woes.
The Coca-Cola Co. (NYSE: KO) was shocking to see on this list as well. A beverage company? After closing out 2012 at $36.26 after splitting its stock in 2012, analysts see upside of 16.9% to a consensus price target of $42.38. The 52-week high is $40.67, and Coca-Cola yields 2.8%. Without making the analogy of Pepsi and an investor taste test, what else is there to say? Analysts expect that PepsiCo Inc. (NYSE: PEP) will rise more than 12% in 2013.
Bank of America Corp. (NYSE: BAC) was the best performer of all 30 DJIA components in 2012. With gains of over 100%, the stock is now overvalued according to Wall St. analysts. Meredith Whitney may have recently upgraded Bank of America, but the year-end consensus price target of $10.60 was implying a negative return of almost 9%. There is at least something positive to say here, and that is that analysts are ratcheting their targets slightly higher already. Thomson Reuters already has lifted its consensus mean target to $11.13. Bank of America only yields 0.3% because it has not been allowed to raise its dividend. What if that changes in 2013?
Hewlett-Packard Co. (NYSE: HPQ) was the worst story of all 30 DJIA stocks in 2013. Unfortunately, what was bad is expected to get worse in 2013. With a downside price target of $13.53, HP shares are now expected to fall just over 5%, even with this yielding 3.5% now. HP’s woes do not stop with the Autonomy acquisition woes. Meg Whitman has fired many employees but warned that a real turnaround might not take hold until all the way into 2016. We expect more asset sales and ultimately more layoffs. HP’s position was not helped out after it became known that famous short sellers are continuing to bet against this PC and IT-services giant.
Johnson & Johnson (NYSE: JNJ) is at least expected to gain 7.2% in 2013 to rise to $75.14. With a 3.4% dividend, this is one of the smallest expected gainers for the year. This might not be such a big surprise, but it is interesting that Johnson & Johnson was so close to its 52-week high at the end of 2012. With so many former quality control issues, and with this market cap already up at $196 billion, it is a real question as to what could be the next driver. Johnson & Johnson has accumulated so many medical units that perhaps its next way to generate value is to identify ways of divesting assets.
The Travelers Companies Inc. (NYSE: TRV) is expected to rise by only 7.6% to $77.26 in 2013. That would represent a 52-week high but this one also has a yield of 2.6%. We would note that the street high target is actually all the way up at $87.00 and shares are currently very close to all-time highs. This insurance provider and financial services giant is not tied into healthcare so it has been immune to some of the ongoing risks. Travelers held up rather well in the recession but many investors do not even know it i one of the 30 DJIA components.
For the fifth “least valuable” of the 30 DJIA stocks, we actually had a tie between Exxon Mobil Corp. (NYSE: XOM) and Verizon Communications Inc. (NYSE: VZ). Analysts expect both to gain only about 7.9% in 2013. With the dividends being grossly different, Verizon outshines Exxon with its 4.8% dividend, versus 2.7% from Exxon. Verizon also does not have the inherent risk of falling oil and gas prices that Exxon has. Exxon is also worth more than $400 billion, versus $125 billion for Verizon. Of the two vying for the fifth spot among the least valuable DJIA stocks, Exxon Mobil would be the de facto “winner” here.
Consensus estimates came from Thomson Reuters; the price, dividend and historical prices came from Yahoo! Finance.
Here is how we came to a DJIA peak target price of 14,590 for a gain of 11.34% in 2013.