10 Dow stocks set to gain in 2012

TheStreet's Jim Cramer says Boeing, Disney and GE are likely to reward investors next year.

By TheStreet Staff Dec 28, 2011 12:52PM

TheStreetBy Jim Cramer

 

What a difference a year makes. Last year at this time I saw a continuation of worldwide growth, a nice double-digit gain in the Dow Jones and some lift to interest rates.

 

My game plan was going along just fine, as the year, at first, seemed headed to be a good one. But then Europe intruded and all bets were off. The question for me is how much we have to fear Europe going into 2012, especially because I didn't fear it enough going into 2011.

 

I think we have to fear it plenty, but that's not necessarily bad news for most Dow stocks. Remember, I am a bottoms-up guy, and as you will see from my analysis, I think we can have a decent -- not spectacular but decent -- year, even if Europe contracts anything but severely, although we certainly have to leave open the prospect that things will really break down over there. What's a breakdown mean? The nationalization of many of the biggest banks, as well as a potential receivership of sorts for Italy, which is, ridiculously, the third-largest bond market in the world.

 

Here are some of the Dow stocks that are most likely to gain 2012, in no particular order:

 

1. Boeing (BA) -- Boeing is at the beginning of a gigantic aircraft cycle with the 787, and when we have these cycles, they tend to last seven years. That means Boeing has become one of my favorite stocks in the Dow because it has literally done next to nothing despite this huge catalyst and a decent dividend. I thought the stock would go to $85 last year, and that was way too bullish. The story is even better this year, so am loath to cut my price target and am leaving it at $85 and calling myself "early."

2. Walt Disney (DIS) -- When Disney boosted its dividend by 40%, that was a signal that management realizes how bright the future for the company is. I think that in the mid-$30s Disney represents compelling value. Down about 20% from its high with terrific momentum to its parks and its ESPN unit, but not its films, Disney could deliver more earnings surprises like the last one and go back to the $40 level.

 

3. General Electric (GE) -- I am partial to 4% yielders because they pay you to wait, in this case paying you to wait for the transformation from a financial company with manufacturing abilities to a manufacturing company with financial savvy and credit availability for large financing purchases. I think the basic businesses -- health, aerospace and energy -- are all in a very good place, and I think the company is not done raising its dividend. Stock will go to $20 if it continues to deliver these strong earnings and continues the dividend increases.

 

4. Home Depot (HD) -- Home Depot is doing everything right, and we are still in a housing crisis. Who knows what this company could do if we actually catch a bottom in housing, which is something that is possible in 2012, given that we are building so few homes in this country these days, about as many as we built when we had half as many people. CEO Frank Blake has done a remarkable job steering Home Depot back from a Bob Nardelli-inspired oblivion, and I think the good news will continue, allowing HD to appreciate an additional 10% without much problem, including the dividend, as this company, like so many others in the Dow, keeps boosting its payout.

 

Related Articles

 

5. IBM (IBM) -- IBM is burning up the joint. I think it can earn $15 next year, and I think a 14-times multiple for those earnings, given IBM's consistency, is not out of the realm. That means IBM could count up to $210 by year end. I am not that concerned about Europe here, even though the company does have large European business, because IBM has been able to put up good numbers despite European weakness and I think it can continue to do so. Some people criticize the company for boosting its bottom line through aggressive share repurchases, but I believe that the market is thrilled to see the numbers and that the company, under a new CEO, will continue to be rewarded.

 

6. Kraft Foods (KFT) -- We are going to have to say goodbye to Kraft as we know it, as this Dow sleeper is splitting into two, the slow-growing grocery business and the much-faster-growing snack business. Consider this breakup like the one that split Altria (MO) with Phillip Morris International (PM), both pieces being terrific. But if you want yield, you go with the Kraft grocery business, a true cash cow. If you want growth and a higher P/E, then Kraft snacks will be for you. You can win both ways, no need to sell either.

 

7. McDonald's (MCD) -- Long one of my favorite stocks in the Dow. I had no idea it could put on this many points and finish the year up more than 20%. That's staggering, especially when you consider that France and Germany were standouts. That's right, France and Germany, two markets that were black holes for just about everyone else. I don't know how much more McDonald's can do for an encore. I could see the stock rallying 10% in 2012 on the late-night hours and the continued expansion in emerging markets. Just an exceedingly well-run company.

 

8. Merck (MRK) -- The deal with Schering-Plough, after initially not showing all that much upside, has started to really help the bottom line, allowing Merck to put through a nice dividend boost, giving it an almost 5% yield. Merck has a mid-single-digit growth rate, but that could be accelerating, so it wouldn't be a stretch to see this stock trade to $42, which would still give it an outsized yield and a valuation not all that stretched compared with its slower-growing competitors.

 

9. Cisco (CSCO) -- I predicted this stock would have a disappointing year, but I never figured it would be this disappointing, and I thought the stock could trade to $21. All that said, the past two quarters from Cisco were positive surprises, and the cost structure is lean enough for me to think $21 is a realistic goal for the year.

10. Pfizer (PFE) -- No more big profit margins with Lipitor, but the company is acting as if the fall-off won't matter much, and it remains committed to buying back shares and boosting its dividend as demonstrated by the surprise 10% hike in December. I think that the combination of stability and safety that Pfizer gives you makes it attractive again for 2012 and that it can inch up to $24.

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Action Alerts Plus, which Cramer co-manages as a charitable trust, has a long position in IBM.

VIDEO ON MSN MONEY

23Comments
Dec 28, 2011 7:32PM
avatar

A perfect world will be when Jim Cramer invest money in his picks. I use to buy his picks and lost a small fortune doing that. Biggest idiot, most hyped bafoon out there! He now like GE with over 1/2 trillion dollar in debt.....crazy!

Dec 28, 2011 9:04PM
avatar
Jimmy Boy, you cant possibly think anyone would take you seriously when it come to picking stocks to invest real money. Your an entertainer not a financial advisor, please disclose that to your audience, clearly and boldly. You have already caused enough damage, so stop the nonsense and tell people your just and entertainer. Just a dancing monkey, no more , no less.
Dec 28, 2011 1:43PM
avatar
Everything you recommend it ripe for profit taking selling.   AKA your friends.

MCD is over bought at a PE of 19.

Cisco?   Really?    It's a has been company not posed for any noticeable growth.

Kraft just hit a 52 week high, why would I buy that high?

Merk just hit a 52 week high, why would I buy that high?  



Dec 29, 2011 1:04PM
avatar
Every day, this is up, that's down. Recommend this, don't buy that. I recommend every sane person get out of the stock market and sit on their money for a while. Let the day traders have at it and pull each other down. The average citizen is getting shafted buy these guys and they are playing us like a fiddle every day. Minute by minute trading is screwing everyone with a standard 401K. This day to day speculation is just that and nothing more. There needs to be a holding period for every stock purchase. This would stabilize the markets and the financials of companies would be much clearer. As it is, there is so much money moving in and out of the market, there is no way of seeing the truth, and the traders want it that way. Smoke screen as always. I for one am done with this insanity. I pulled the plug and will wait until I feel it's a safe and (fair) to invest again.
Dec 28, 2011 5:25PM
Dec 28, 2011 1:22PM
avatar

CAUTION...BEFORE YOU BUY ANY OF THIS FOOL'S PICKS

1 gold at 1900

2 gold as protection against stock price decline

3 alcoa at 18 as the best dow stock for 2011

4 nyx at 90 as stock of the year in 2010

5 sears at 155 'never bet against eddie lampert'(one of his crooked friends)

 

THIS LIST IS ENDLESS BUT HIS WORST PICKS ARE STOCKS OF THE YEAR PICKS

either this guy is a total fool or a total crook

Dec 29, 2011 10:45AM
avatar
This guy was, is and will always be a bozo. Anyone with a modicum of intelligence should avoid this idiot like the plague. Perhaps a good idea to short his picks.
Dec 28, 2011 7:08PM
avatar

I can't believe Cramer would recommend Boeing with the world economy looking flat for another couple years at least, and Pfizer ? PFE has not moved much in years, they have decreased their dividend though. GE ? Another dog that's not going anywhere fast.

 

I've got to the point where I do the exact opposite of what Cramer and a few others like him recommend.

 

Jim's quick to advise a buy, but wants you to pay for the sell notice. The whore Tongue out .

Dec 29, 2011 11:34AM
avatar
don't forget nyx 90 down to 25 as his STOCK OF THE YEAR  for 2010
Dec 28, 2011 9:33PM
avatar
why would anyone listen to jim. this guy is a convicted felon for extortion of money and fraud
Dec 28, 2011 10:40PM
avatar

Cramer doesn't even listen to his own advice. He wanst you to both buy adn sell four diffrent times. Your stock broker would love you with all the commissios he wil get and the stock can go higher when you buy and lower when you sell.

 

Cramer says to reinvest dividends but that would be at a market sale prices which he says not to do.

 

Take the dividend cash and invest in stocks using limit ordesr or just keep the cash. To hell with Cramer the clown.

Dec 28, 2011 5:29PM
avatar

short or avoid anything he picks

 

he may be picking last year's super bowl on tonight's program

Dec 28, 2011 3:06PM
avatar

i see many down thumbs on my posts.......the cramer lemmings must be reading

FOLLOW THIS UNFUNNY COMIC AND LOSE YOUR ****

Dec 28, 2011 1:28PM
avatar

properly hedged etf's killed this guy's crap and also beat the averages

 

if my stock YIELDS 5 pecent per YEAR and drops 8 percent in one DAY  that's good?

according to this idiot it is .....and when the dividend gets cut or eliminated what

happens to your HIGH YIELDER ?

 

msn should be sued for letting this guy spew his crap

Dec 28, 2011 1:23PM
avatar

wah wah europe wrecked my picks

wah wah wah etf's wrecked my picks

wah wah wah

Dec 29, 2011 5:23PM
avatar
I was up 14% in 2011 ..... Don't just listen to your broker,  do your own digging and research ...... with investments being global, it is a lot easier to make money than just hanging your hat on American companies and currency. It was great year in India, Malaysia, China, etc.
Jan 16, 2012 12:31AM
Jan 10, 2012 4:36AM
avatar
OK here it is I have 15k to invest what's the best way to do it? I need to turn 15k into 100k in 6 month's how do i do it?
Dec 29, 2011 1:48AM
avatar
Some of you people just argue because it is Cramer. I think he has a fairly strong list. Boeing and GE are both solid options. Boeing is strong so long as news from the 787 program remains positive as well as the KC-46 Tanker program. I've got Intel over IBM personally for several reasons not the least of which is stock price and dividend yield. I've been watching PFE for some time now but for now I'm sticking with Johnsons and Johnsons. I do follow my own advice and own all 4 of those among others. If you want to attack Cramer's advice, provide real facts that show a stock is bad fundamentally not personal opinions of Cramer.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

RECENT QUOTES

WATCHLIST

Symbol
Last
Change
Shares
Quotes delayed at least 15 min

MARKET UPDATE

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market finished the Thursday session on a higher note with the S&P 500 climbing 0.5%. The benchmark index registered an early high within the first 90 minutes and inched to a new session best during the final hour of the action.

Equities rallied out of the gate with the financial sector (+1.1%) providing noteworthy support for the second day in a row. The growth-oriented sector extended its September gain to 1.9% versus a more modest uptick of 0.4% for the ... More


Currencies

NAMELASTCHANGE% CHANGE
There’s a problem getting this information right now. Please try again later.