Cramer: Unlikely hero fueling the Dow's 18K

The Dow Jones industrial average broke out above the 18,000 level on Monday. Three months ago it seemed impossible to Jim Cramer that this could ever happen.

So, what fueled the run to this level?

"We rebounded from levels that we shouldn't even have been at, given that circumstances were changing for the better," the "Mad Money" host said.

When Cramer took a closer look, he found a singularly odd group of stocks with one thing in common — they were the least expected winners imaginable.

He ticked off the Top 10 names behind the Dow's run to 18,000.

Superhero at work
Robert Daly | Getty Images
"CAT is the most unlikely hero of 2016." -Jim Cramer

The first big winner was Caterpillar, up 16 percent for the year. Caterpillar will report on Friday, and Cramer expects it to be ugly. After all, the company's end markets are in shreds: oil and gas earth-moving, coal mining, large construction projects and road building. Plus, it has a huge business in China.

Caterpillar has struggled with earnings, far worse than Cramer would have thought four years ago. But, Cramer thinks its success this year stems from the stock already reflecting the negatives coming into 2016.

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Even worse, one month ago the company slashed its first-quarter-earnings estimates while keeping its full-year guidance for 2016. Immediately, bearish investors said this was a disastrous development.

Wrong. In fact, Caterpillar has never given any first-quarter guidance. Cramer's takeaway was that Caterpillar felt confident in its earlier full-year guidance. Thus, this move turned out to be positive for the stock when the smoke in the market cleared and many investors believed that the worst was over.

"The fact is, though, CAT is the most unlikely hero of 2016, the quintessential representative of the rolling bull market that is taking up the industrials," Cramer said.

The Dow's second best performer was Wal-Mart, up 13 percent in 2016, an incredible move in Cramer's opinion. Like Caterpillar, there hasn't been a good word said about the company in over a year. That didn't matter for the stock, which was oversold when the company announced a gloomy earnings estimate last year.

The third unlikely leader was 3M, which turned heads when it reported last. Many investors expected disappointing numbers because the company is heavily tied to global growth.

"Unlike CAT and Wal-Mart, there was a step-up in earnings that drove the stock's 12 percent gain. The others just got oversold. But 3M is truly a powerhouse member of the Dow," Cramer said.

Other winners driving the Dow higher were Verizon, IBM, Exxon, Chevron, United Technologies, McDonald's and United Health Group.

"If you accept that, in 2015, these mostly cyclical stocks deserved a hammering but not a total beat-down, then it is easy to see how we could bounce back to the Dow 18,000 again," Cramer said.

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