Goldman Sachs Group Inc. (NYSE: GS) had a 5.5% weighting in the Dow, but the year-end price of $229.93 brought on a return of better than 37% last year. The premiere investment banking giant has been moving more toward retail and consumers (rather than just the wealthy and institutions), and if that pays off it could bring huge rewards. The consensus target price of $244.73 implied an expected total return of 8.6%, after adding in its 2.2% dividend yield, in 2020. Excitement grew around some segment reporting changes that were announced, and the new CEO is expected to be a more friendly communicator with regulators, according to some. Goldman Sachs was marred by controversy in late 2018 and in early 2019, and it’s very possible that, as those negatives fade into history, analysts will become more warm. Wells Fargo even issued a $280 target price in recent weeks, which would imply gains of more than 20% this year.

Home Depot Inc. (NYSE: HD) had a 5.2% weighting in the Dow, and its return of 27% in 2019 would have been better had it not run into some unexpected hiccups. All Home Depot has to do is manage to hold its lead over rival Lowe’s and to have a stronger housing market and a super-low unemployment rate help it grow revenues better than just the 2% in 2019 and 4% for 2020. The consensus target price of $233.28 was not even quite above the 52-week high and implied an expected gain of 9.3% after the 21.5% yield is included. If the company gets its earnings back on track, then Home Depot could be looking at potential gains of 15%, or even 20%, before analysts start screaming about valuations getting too stretched.

McDonald’s Corp. (NYSE: MCD) ended with a 4.8% weighting in the Dow, and its year-end price of $197.61 was still up more than 11% in 2019. That said, McDonald’s would have to rise more than 12% just to get back above its prior high of $221.93. The consensus target is $223.07, implying an expected gain of more than 15%. If McDonald’s can continue improving under its brand new CEO and can continue in its recent past of returning great sums of capital to shareholders, it’s quite possible that its gains could outpace expectations.

3M Co. (NYSE: MMM) continued to languish in 2019, and its weighting is 4.2% of the Dow. Its fourth-quarter gain of over 11% helped curb the losses to only 7.4% for the year. Trade tensions easing should help 3M’s China sales, and any communication by management that it will be able to get to the bottom of its ongoing margin erosion issues will instill confidence. It’s also possible that an activist investor could bully the company while it continues to restructure and trim fat. This stock was down close to 30% from its highs at one point, and analysts may have been too negative with a $171.44 consensus target price after it closed out 2019 at $176.42. 3M has raised its dividend for decades, and any improvement and earnings visibility would give investors comfort that its shares could rally another 10% to 20% before the street demands more “show-me” results.

Microsoft Corp. (NASDAQ: MSFT) was the Dow’s second-best gain in 2019, with over 55% returns. What is amazing is that Satya Nadella has taken Azure into a direct front with Amazon’s AWS in the cloud, and despite the Department of Defense’s cloud contract being disputed, the $10 billion JEDI award is still more likely than not to end up staying with Microsoft. Microsoft also has a new refresh of the Xbox video game console coming out at the end of 2020, and the company continues to win from its online Office and software sales on desktop PCs. The consensus target price of $163.63 implied a return of just 5.1% after dividends from the $157.70 year-end price. Any continued upside in earnings and any favorable JEDI pact ruling would add greatly to Microsoft’s expected returns, and analysts might be confronted with having to issue price targets up closer to $200 if the bull market keeps raging.

International Business Machines Corp. (NYSE: IBM) has only close to a 3.2% weighting in the Dow, but this stock is so battered and is valued so low (10 times earnings) that any upside surprises, and even less of a bleed in the old IT-services contracts, could take an expected gain of 15% from its $134.04 year-end price much higher. Imagine if IBM were to announce it was looking for a new CEO, or imagine if Red Hat begins to pay off above its baseline potential. Imagine if IBM’s strategic imperatives regain interest. IBM used to be over $200 a share, and its stock has not moved anywhere but down for most of the past decade. Just a hint of increasing revenue growth might rekindle Wall Street interest with much stronger expectations.

Using this baseline model has worked well for trying to look at a peak value rather than for a year-end price target. That said, all investment models have imperfections and may not reflect some drastic unknown changes that await, and there always seems to be some unexpected winners and some unexpected losers over the course of any given year.

It would not require much more than two or three of these upside scenarios to handily create even higher upside in 2020. There is no preset rule of where stocks will go over the course of any given year.

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