Cramer: Date the Darlings of the Dow?
Lately, the Dow has been getting a lot of attention.
As Jim Cramer first told you on Wednesday, the triple digit gains on the first day of trade were extremely rare.
Throughout American history there have only been five instances when the Dow made a triple-digit move on the first day of trading. And by the year's end, the Dow had gone onto finish with a gain of greater than 7 percent in each of those years.
That sounds impressive but the Dow is an index made up of 30 individual stocks. And pros like Jim Cramer always look at the individual components– after all, it's the movement in each and every single stock – that ultimately moves the Dow.
Following are what we call the Darlings of the Dow – that is, the better performing Dow stocks of 2012. Which still catch Cramer's eye and which is he kicking to the curb?
Bank of America gained 108.8% in 2012.
"Given how cheap it is and how the housing recovery is still in its infancy, I wouldn't be surprised if there were still bigger gains to come, now that CEO Brian Moynihan is on record saying he's ready for his bank to step up its lending. The stock could go to $16 before it's fairly valued," said Cramer.
Home Depot gained 47.1% in 2012
"That outsized return wasn't just about the housing recovery. The management has been taking share aggressively, and I bet the post-Sandy rebuild will be great for business," said Cramer
Disney gained 32.7% in 2012.
"Bob Iger, one of my favorite CEOs around, threw some cold water on the future after the most recent quarter, but maybe that's where the opportunity comes in—I think the stock can go up ten percent from here, easily," said Cramer.
JPMorgan gained 32.2% in 2012.
"JP Morgan always seems to fail right here, and unless the company is allowed to return gobs of capital to shareholders, I fear it won't be able to repeat that performance," said Cramer.
American Express gained 21% in 2012.
"That fourth quarter rally in the financials gave new life to the sector," said Cramer, "but I don't know if this stock can maintain its pace. American Express seems tapped out," said Cramer.
Travelers gained 21.8% in 2012.
"Travelers, while a fabulously run company, is simply not one that you should expect to go up 21% year after year. It's a slow-mover in the fast lane," said Cramer
General Electric gained 17.2% in 2012.
"I see GE as a play on the worldwide recovery with oil and gas exposure at a time when that industry could be rebounding thanks to China. And the company still has a ton of room to boost that dividend, which already yields 3.6%," said Cramer.
Pfizer gained 15.8% in 2012.
"I think they can not only repeat that performance but best it, as the giant drug company takes action to bring out value in its animal health business and does its best to return capital via an even higher dividend. It's not a glamorous stock but Pfizer lets me sleep at night," said Cramer.
Wal-Mart gained 14.1% in 2012.
"I don't know if Wal-Mart can repeat its gains given the runs it's already had," said Cramer. "However I do think it's reasonable to think Wal-Mart can work its way back to its old high of $77 from its current perch of $68 and change."
3M gained 13.6% in 2012.
"3M is a natural to repeat its 2012 gain if not do even better, given its strong Asia exposure and its best in class status in new technologies. Remember, 3M's been held back by a weak China," said Cramer.
United Technologies gained 12.2% in 2012.
"United Technologies has been living in the shadow of the fiscal cliff's military spending cuts. It can gain from here but no doubt will take hits at various points in the upcoming debt ceiling debate," said Cramer.
AT&T gained 11.4% in 2012.
"This gain reminds me that even the most boring of stocks can generate double-digit returns through good dividends, bountiful buybacks and steady-eddie performance. I think the same gain is in the cards for this year," said Cramer.
Cisco gained 8.6% in 2012.
"Cisco, for all its flaws, still beat the Dow by a percentage point. I can't see this company returning to the days of yore, but 8%? It can do that again, especially as telco carrier spending is expected to pick up this year, and Cisco certainly seems cheap."
Merck gained 8.5% for 2012.
"The pipeline needs improvement here. Until we hear about something that could produce multiple billions of dollars in the out-years I expect to see high single digit gains only," said Cramer.
Verizon gained 7.8% in 2012.
"Verizon didn't help the cause, advancing only about as much as the overall index last year. I think it will play catch-up to AT&T, which played catch-up to Verizon last year, in the endless seesaw between the two."
United Health gained 7.0% in 2012.
"United Health has been kept back by a lack of small business formation coupled with cut-throat pricing," said Cramer. I just don't see much upside without job growth, and that's simply not happening fast enough to get this stock back up any time soon."
*2012 gain or loss reflects the change in stock prices beginning 01-02-12 and ending 12-31-12.
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