These Dow darlings could continue to smash records

When it comes to the market this year, everything old is new again.

A handful of classic Dow stocks have defied gravity in 2017, pushing the index to records. But given the sky-high returns, some market experts are encouraging investors to be selective buying these names into the end of the year.

Boeing, 3M, UnitedHealth, Caterpillar and McDonald's are some of the biggest point contributors to the Dow this year – adding a respective 720, 388, 328, 303 and 291 points to the index's more than 3,000 point gain.

Following its earnings report on Tuesday, David Seaburg of Cowen believes McDonald's has more room to run.

"I think that their outperformance from a comp perspective as far as the average fast-casual name is just the basis point of outperformance," he said Tuesday on CNBC's "Power Lunch." "The gap has just widened again so they're executing in my opinion, on really all cylinders here."

The stock is up 34 percent this year, driven by strong sales and the company's repeated commitment to technology upgrades both in-store and in its mobile ordering and delivering services.

Mike Binger, senior portfolio manager at Gradient Investments, on the other hand, believes that Caterpillar could be the better buy, especially on the back of an improving earnings outlook.

"Earnings this year [for Caterpillar] went from the $5 to $6, so next year it could be $8 to $9," he said on "Power Lunch." "That stock is working right now, I would buy it."

Over the past month, the industrial name has actually been the third-biggest contributor to the Dow behind 3M and UnitedHealth.

Caterpillar shares are up around 47 percent this year.

Disclosure: Gradient Investments and Mike Binger do not own shares of Caterpillar.



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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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