Investing
DJIA 2013: Best Targets Imply More Than 11% Gain to 14,590 (AA, BAC, CVX, GE, HD, HPQ, INTC, JPM, MMM, UTX, KO, MCD, MRK, PFE, MSFT, PG, T, VZ, UNH, WMT, XOM)
January 2, 2013 6:22 am
Last Updated: April 27, 2020 8:20 pm
The past year had some incredible wins and losses, as well as some strange developments that almost seem hard to imagine if you tally everything up. Bank of America Corp. (NYSE: BAC) was the biggest DJIA winner in 2012, with gains well over 100%. It was the biggest dud of 2011 and was really feeling “at risk” a year ago, but analysts now consider its price overvalued. J.P. Morgan Chase & Co. (NYSE: JPM) lagged significantly due to the losses from the London Whale, and it is not even expected to generate 10% returns in 2013.
McDonald’s Corp. (NYSE: MCD) was the biggest winner of 2011, but it was the third worst performer of 2012, with a loss of close to 9%. Intel Corp. (NASDAQ: INTC) continues to be passed by the mobile computing move, and its shares were down by double digits in 2012. Hewlett-Packard Co. (NYSE: HPQ) was the DJIA’s biggest loser, with a loss of more than 40%, and analysts now show an expected loss for 2013, as well.
Other strange developments have come about as well. Microsoft Corp. (NASDAQ: MSFT) was up only 3% in 2012, but the new consensus price target is calling for a magic performance of close to 30% when it is struggling in its core markets. Procter & Gamble Co. (NYSE: PG) is under pressure from an activist investor group and analysts only expect its performance to be largely equal to other DJIA stocks.
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AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) both had a respectable 2012 due to investors chasing yield, but they are expected to return about 8% each in 2013. Alcoa Inc. (NYSE: AA) hardly budged in 2012, but it is somehow expected to have a gain of about 20% in 2013.
General Electric Co. (NYSE: GE) is now expected to outshine the performance of both 3M Co. (NYSE: MMM) and United Technologies Corp. (NYSE: UTX). Chevron Corp. (NYSE: CVX) is supposed to have performance almost double that of rival Exxon Mobil Corp. (NYSE: XOM). UnitedHealth Group Inc. (NYSE: UNH) is the newest DJIA component, and its performance in 2013 is projected to be a whopping 23%. Wal-Mart Stores Inc. (NYSE: WMT) finally greatly outperformed its expected price moves in 2012, and analysts are now positive ahead. Even Home Depot Inc. (NYSE: HD) incredibly outperformed expectations in 2012, and analysts are now looking for more good things to come in 2013 as housing is expected to keep recovering.
The Coca-Cola Co. (NYSE: KO) split its stock in 2012, and Kraft Foods split itself up only to get booted out of the DJIA in favor of UnitedHealth. Merck & Co. (NYSE: MRK) out-yields Pfizer Inc. (NYSE: PFE) and is expected to perform better in 2013.
As in prior years, we have used the consensus analyst price targets from Thomson Reuters for each of the DJIA stocks. Rather than using the DJIA price-weighted index calculation, we used an equal weighting that shows an expected 11.34% gain to the peak value of the DJIA in 2013. If that 14,590 projection turns out to be true, then investors have another great year to look forward to.
The reason we use an equal weighting for the DJIA is rather simple: as each year passes, not all of the sectors and components perform as expected. Still, it turns out that as a group the weighting adjustment we use in calculating the peak comes within about 1%. The big caveat is that analysts almost certainly will make new adjustments on the major stocks in the first few weeks of 2012.
Here is the breakdown of each of the 30 DJIA stocks for 2012 in a simple table by ticker. We have shown the end of 2012 price and the consensus price target from Thomson Reuters. We have also shown the expected gain in 2013 to the consensus price target, as well as the 52-week trading range for each of the 30 DJIA stocks. We even went so far as to include the dividend yield so that investors could see how much this plays into the return of each.
JON C. OGG
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