Nike Inc. (NYSE: NKE) has only a 2.25% weighting, and all that has to happen is a marginal international gain and for it to hold off competition from Under Armour, Adidas and some of the cheaper apparel and footwear lines. It may sound easy enough, but 2019 was somewhat of a recovery year, and its shares were up 25% year to date.
UnitedHealth Group Inc. (NYSE: UNH) has the second-highest weighting in the Dow at 6.5%, and it has greatly underperformed, with an 8% year-to-date gain. All that it needs to hear is that Medicare-for-All just isn’t mathematically possible or faces a constitutional fight to the point it would need a new constitutional amendment. Think of everything else it has endured up to this point, and anything resembling that is likely a victory for the largest private insurer for corporate and enterprise health insurance plans.
Many other issues could also play a role in getting the Dow up to 30,000 and beyond. Much of the Dow is still not participating in the great gains of 2019. Here are just a few issues to consider.
Caterpillar Inc. (NYSE: CAT) may still be up 14% so far in 2019, but it has yet to feel any serious recovery in its key growth markets of Asia and South America. Any boost at all will send its 52-week highs even higher.
Chevron Corp. (NYSE: CVX) and Exxon Mobil Corp. (NYSE: XOM) have underperformed on almost all metrics as Dow members. If oil production keeps drifting lower in 2020, and if the demand increases only a tad more, then the scales could be tipped back in their favor. The two oil and gas giants have a combined 4.6% weighting.
Cisco Systems Inc. (NASDAQ: CSCO) is a mere 1.1% weight in the Dow, so even a miraculous recovery would hardly move the needle.
Merck & Co. Inc. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE) have both underperformed in 2019. Merck was up 11% and Pfizer was last seen down about 14%. What if the drug pricing fears don’t occur, and what if Medicare-for-All proves to be unconstitutional or just cannot make it through? Pfizer is the lowest weighting of all Dow stocks with a 0.9% weighting, but it is dirt cheap at only about 12 times earnings, and it would have to rise 25% or so before all-time highs were an issue again.
Verizon Communications Inc. (NYSE: VZ) has done very little with a mere 6% return in 2019, but the company has not leveraged itself in the same manner as AT&T with game-changing acquisitions. It has a 4.2% yield that may be heading even higher and at 12 times earnings there is still a lot of room for value investors to want to chase its safe dividend yield.
Walgreens Boots Alliance Inc. (NASDAQ: WBA) has been a serial disappointment, but even a marginal improvement (or that elusive low-probability buyout rumor) would potentially take its 1.5% weighting up closer to 2%. Still, that hardly moves the needle for the Dow.
Some firms have even started issuing their preliminary 2020 outlook for the S&P 500. The new Credit Suisse target for the S&P 500 is 3,425, which comes with almost 10% in implied upside for stocks.