Investing

2020 Bull/Bear Outlook Sees the Dow Rising to 30,650 Before Year-End

Walmart Inc. (NYSE: WMT) still can be a resilient threat and force against the growth and dominance of Amazon. With annual revenues of more than $500 billion, and expected to rise 2% this year and 3% next year, the Walton empire is not expected to give in to the rise of Amazon any time soon. That said, Costco and Target have posted impressive gains of their own at the same time that it’s getting ever harder to find the proper dirt and locations for many new Walmart stores in the United States.

While the 2020 baseline prediction calls for the Dow to generate returns of 7.4% to 30,650 in 2020, here are the very simple steps from the top six components by weighting that could take the Dow up over 10%, to perhaps even 12%, in 2020:

  • Boeing (7.8% weighting) gets its 737 Max recertified with the FAA and international agencies and manages to keep its orders going.
  • Apple (7.0% weighting) achieves its iPhone super-cycle, with the rise of Apple TV, apps and services, and the most bullish analyst has even laid out a path to a $400 blue-sky upside.
  • UnitedHealth (6.8% weighting) loses the threat of Medicare for All and universal care for another four years.
  • Goldman Sachs (5.5% weighting) manages to rekindle growth and grow Marcus and efforts to bringing in main Street clients.
  • Home Depot (5.2% weighting) manages to hold its lead over rival Lowe’s and to grow revenues better than just the 2% in 2019 and 4% for 2020.
  • And McDonald’s (4.8% weighting) just manages to retake its old high as analysts are currently predicting.

Investors need to understand that there is no preset golden rule of where stocks will go in 2020. Using this model has worked well for trying to look at a peak value rather than for a year-end target, but all models have imperfections and may not reflect some drastic unknown changes that await, and there are always some that come up.

Unlike in 2019, it looks as though 2020 is the year that dividends are expected to be a key component of total returns. Just about every Dow stock raises its dividends each year, and that is expected to be the case in 2020. Stronger dividends are meant to show strong confidence for years ahead through multiple business cycles, while weaker dividend growth (or no dividend growth) would likely be viewed with caution.

The top consensus estimates likely will change after the first earnings reports come in during January, and that will hone in a closer outlook into what lies ahead for 2020. We have already shown how upside in just six of the Dow stocks with a combined 41% weighting of the index might take it up to 10% or 12% in 2020, closer to Dow 31,500. There is also no reason that a rekindled global economy and a wind-down of many of the top tensions around the planet could add even more gains than were expected at the start of 2019.

Here is the table of all 30 Dow stocks for 2019 gains and the 2020 outlook at the start of the year.

2020 Dow Outlook 2019 Close 52-Week Range 2020 Target Est. Upside Yield Tot. Return Est. 2019 Gain/Loss
3M $176.42 $150.58 – $219.75 $171.44 −2.8% 3.3% 0.5% −7.41%
American Express $124.49 $93.23 – $129.34 $131.83 5.9% 1.4% 7.3% 30.60%
Apple $293.65 $142.00 – $293.97 $266.22 −9.3% 1.1% −8.2% 86.16%
Boeing $325.76 $309.40 – $446.01 $366.40 12.5% 2.5% 15.0% 1.01%
Caterpillar $147.68 $111.75 – $148.93 $144.82 −1.9% 2.8% 0.9% 16.22%
Chevron $120.51 $107.10 – $127.34 $136.48 13.3% 4.0% 17.3% 10.77%
Cisco Systems $47.96 $40.96 – $58.26 $52.40 9.3% 2.9% 12.2% 10.69%
Coca-Cola $55.35 $44.42 – $55.92 $58.76 6.2% 2.9% 9.1% 16.90%
Dow $54.73 $40.44 – $60.52 $55.90 2.1% 5.1% 7.2% 9.90%
Exxon Mobil $69.78 $66.31 – $83.49 $78.47 12.5% 5.0% 17.5% 2.33%
Goldman Sachs $229.93 $163.35 – $232.21 $244.73 6.4% 2.2% 8.6% 37.64%
Home Depot $218.38 $168.21 – $239.31 $233.28 6.8% 2.5% 9.3% 27.10%
Intel $59.85 $42.86 – $60.48 $56.72 −5.2% 2.1% −3.1% 27.53%
IBM $134.04 $111.69 – $152.95 $148.30 10.6% 4.9% 15.5% 17.92%
Johnson & Johnson $145.87 $125.00 – $147.84 $154.24 5.7% 2.6% 8.3% 13.03%
JPMorgan $139.40 $95.94 – $140.08 $128.58 −7.8% 2.6% −5.2% 42.80%
McDonald’s $197.61 $173.41 – $221.93 $223.07 12.9% 2.5% 15.4% 11.29%
Merck $90.95 $72.05 – $92.64 $97.94 7.7% 2.7% 10.4% 19.03%
Microsoft $157.70 $97.20 – $159.55 $163.63 3.8% 1.3% 5.1% 55.26%
Nike $101.31 $71.21 – $101.79 $108.98 7.6% 1.0% 8.6% 36.65%
Pfizer $39.18 $33.97 – $44.56 $41.91 7.0% 3.9% 10.9% −10.24%
Procter & Gamble $124.90 $89.08 – $126.60 $127.95 2.4% 2.4% 4.8% 35.88%
Travelers $136.95 $115.06 – $155.09 $141.29 3.2% 2.4% 5.6% 14.36%
United Technologies $149.76 $103.23 – $151.07 $160.71 7.3% 2.0% 9.3% 40.65%
UnitedHealth $293.98 $208.07 – $300.00 $310.32 5.6% 1.5% 7.1% 18.01%
Verizon $61.40 $52.28 – $62.22 $61.75 0.6% 4.0% 4.6% 9.21%
Visa $187.90 $127.88 – $189.89 $203.43 8.3% 0.6% 8.9% 42.41%
Walgreens $58.96 $49.03 – $74.94 $57.11 −3.1% 3.1% 0.0% −13.71%
Walmart $118.84 $91.64 – $125.38 $130.41 9.7% 1.8% 11.5% 27.58%
Walt Disney $144.63 $105.94 – $153.41 $156.28 8.1% 1.2% 9.3% 31.90%
AVERAGES 4.8% 2.6% 7.4% 22.05%

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