Apple Inc. (NASDAQ: AAPL) is the largest stock in the world, with a $1.19 trillion market cap, but its $265.00 share price gives it only a number three spot on the Dow with a 6.4% weighting. Apple shares have broken out to higher highs, and any news of a truce with China will remove an incredible overhang that still may not be factored in. On top of the Apple TV efforts, 2020 is expected to have yet another big iPhone refresh cycle, and Apple has been rumored for years now to be ready to expand its line of product offerings that will help grow its ecosystem of add-on services and recurring revenues.
Boeing Co. (NYSE: BA), despite all the problems around the 737 Max crashes and grounding, is still the most important of all 30 stocks in the Dow, with a 9% weighting. Boeing merely needs progress at the start of 2019 and a relaunch of the 737 Max at some point, and then it’s back and off to the races. With a share price of almost $372, Boeing has underperformed, but it’s still up 15% year to date. Its high of $446 that was seen earlier in the year is still 20% above the current price, and some analysts, ahead of cutting expectations, had laid out a path for how Boeing could rise to $500 or even $600.
Goldman Sachs Group Inc. (NYSE: GS) is the fifth-highest weight in the Dow at 5.3%, based on its shares back up to around $220. Even though it’s up over 31% year to date, it was nearly a $270 stock at the start of 2018, and some analysts believed it was heading to $300 before scandals and problems hit at the same time as trading revenues and net interest compression were hitting. And Goldman Sachs has been somewhat aggressively targeting its next customer acquisition move with the launch of Marcus for retail banking and personal finance moves. If the yield curve cooperates, and if further economic deterioration doesn’t bleed into more trading losses (and lower management fees), then Goldman Sachs could be looking at closer to a $250 share price without much of an argument.
International Business Machines Corp. (NYSE: IBM) may be up 18% so far in 2019, but that has interested the value investing community more than the growth investing community, with its valuation of 10 times expected 2020 earnings. The Red Hat acquisition did not translate into any great post-earnings gains, and it is still down almost 40% from its peak in 2013. Even no change in strategy and the announcement of a new CEO (or her “early retirement”) would likely send IBM shares higher. Still, IBM is only the 14th largest Dow stock, with a 3.25% weighting. At $133.50 share, it has a 52-week range of $195.94 to $152.95 and a consensus target price of $148.11.
Johnson & Johnson (NYSE: JNJ) has been held down by asbestos in talcum powder lawsuits and by its role in the opioid crisis. The company is aggressively fighting on both fronts, with the claim that it doesn’t really have asbestos in talcum powder. And it had a very small role in the opioid crisis, relatively speaking, versus peers. Any resolutions on either front could send its shares higher, but with a 3.2% weighting, it has to rally a lot for its contribution to add much to the Dow’s gains.
3M Co. (NYSE: MMM) is a conglomerate that has lost its way with a lack of clarity on where the real problems are. Its CEO is still relatively new, and 3M has had its share of woes from Asia and has found itself in the midst of an environmental problem that its shareholders just are not used to. It also has developed a serious issue in meeting earnings expectations. At nearly $172 a share, 3M is up from a 52-week low of $150.58, even though its shares are still down almost 10% year to date. 3M is down from a 52-week high of $219.75, and it was a $250 stock at the very start of 2018. 3M is the eighth highest weighting on the Dow at 4.16%.
McDonald’s Corp. (NYSE: MCD) was most recently in the news over firing its CEO for an improper relationship. The reality is that the investing community was treating the stock as though its large shareholder return plan, gearing its menu and taking the all-day breakfast option were all priced in. At $193.97 a share, McDonald’s still carries a 4.7% weighting, even after having fallen from a peak of $221.93. If the new CEO can further develop the move using automation and some artificial intelligence that already has started, perhaps a move further into meat alternatives might add more to its margins. Analysts still have a consensus target price of $221.89.
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