Goldman Sachs believes these stocks will lead the Dow to its next milestone

Published Wed, Jan 25 201711:38 AM ESTUpdated Wed, Jan 25 201712:19 PM EST

As the Dow Jones industrial average breaches the 20,000 level for the first time, CNBC PRO found the stocks analysts at Goldman Sachs believe will lead the Dow to 21,000 and beyond. The Dow has added about 1,000 points or 5 percent in the past two months in a continuation of the stock market's postelection rally. We first identified Goldman's ratings for all the Dow members and tossed out those companies with a neutral or sell rating from the investment firm's analysts (About 75 percent of the Dow's 30 components). Among the buy-rated companies, we then used Goldman's 12-month price target to spot the stocks with the most upside potential from the current levels. Goldman's favorite stock in the Dow, based on percentage change to the 12-month price target, is Disney . The firm predicts the stock could rally 24 percent in the next 12 months. Last week, the investment firm upgraded Disney to buy from hold, citing the potential for earnings to spike on upcoming movie releases. "Studio entertainment should benefit from what may [be] Disney's strongest ever film slate with four Marvel films, two 'Star Wars' films and three animated family films," equity analyst Drew Borst wrote in a note to clients. Borst believes fiscal 2018 will mark a record for revenue and operating income from movie production, with many of the new releases driving high-margin consumer product licensing. Additionally, earnings growth from new theme park attractions and favorable valuations could also help the stock, according to Goldman. The next favorite Dow stock of Goldman is Caterpillar , which is expected to rise 16 percent in the next 12 months. Analyst Jerry Revich believes margin expansion for the industrial giant could be on the way, as the company consolidates its products, reduces its R & D footprint and allocates capital toward high-return investments. "We upgrade CAT ... as we see structurally higher margins in this cycle," Revich wrote in a research note in October. "Our view of $8 in normalized earnings is well ahead of investor expectations, and if realized, we believe will drive the next leg of upside for the stock."

Fireworks explode over the Cinderella Castle at The Magic Kingdom, part of Disney World in Orlando, Florida.

Vanessa Carvalho | Brazil Press Photo | LatinContent | Getty Images

As the Dow Jones industrial average breaches the 20,000 level for the first time, CNBC PRO found the stocks analysts at Goldman Sachs believe will lead the Dow to 21,000 and beyond.

The Dow has added about 1,000 points or 5 percent in the past two months in a continuation of the stock market's postelection rally.

We first identified Goldman's ratings for all the Dow members and tossed out those companies with a neutral or sell rating from the investment firm's analysts (About 75 percent of the Dow's 30 components).

Among the buy-rated companies, we then used Goldman's 12-month price target to spot the stocks with the most upside potential from the current levels.

Goldman's favorite stock in the Dow, based on percentage change to the 12-month price target, is Disney. The firm predicts the stock could rally 24 percent in the next 12 months.