Those who claim you can’t make money in blue-chip dividend stocks should take a look at the following top 5 Dow components.
They’ve at least doubled since the March 2009 low, which was two years ago this week.
Although the mega-cap index has lagged the S&P 500 and Nasdaq since then, several companies have surged. Several may still outperform in 2011.
Caterpillar's stock has more than quadrupled since the March 2009 low. It has climbed 74% in 12 months and 14% in three. Caterpillar ranks as analysts' tenth least-favourite Dow stock. Of researchers following Cat, 13, or 59%, advise buying its shares and nine say to hold.
None recommend selling. Macquarie offers the highest target on Wall Street, expecting a gain of 24% to $125. Sterne, Agee & Leach, ranking Cat 'neutral', expects a marginal rise to $103. Cat trades at a forward earnings multiple of 12 and a cash flow multiple of 13, 26% and 19% industry discounts. The shares are expensive based on book value.
American Express's stock has more than tripled since the 2009 low. It has risen 12% in 12 months, but fallen 4.6% in three. AmEx places as researchers' ninth least-favourite Dow stock. Of the analysts covering AmEx, 18, or 67%, rate its stock 'buy', six rate it 'hold' and three rank it 'sell.'
Piper Jaffray offers a target of $62, suggesting a 12-month rise of 44%. Raymond James forecasts a fall of 16% to $36. American Express, undervalued based on its 5.6 cash flow multiple, is fairly valued when considering forward earnings and book value. Fourth-quarter adjusted earnings jumped 59%, still missing consensus.
Bank of America's stock has more than tripled since the 2009 stock-market low. It has fallen 16% in 12 months, but rallied 18% in three. Bank of America ranks as researchers nineteenth favourite Dow stock. Of analysts covering the equity, 60% rank it 'buy.'
Raymond James is optimistic, predicting a gain of 73% to $24. Deutsche Bank, on the other hand, expects the stock to fall to $13. Bank of America sells for a forward earnings multiple of 7.5, a book value multiple of 0.6, a sales multiple of 1.1 and a cash flow multiple of 1.7, 32%, 35%, 42% and 66% peer discounts. The bank swung to a quarterly profit of 30 cents, beating Wall Street's consensus.
DuPont's stock has rocketed 184% since the March 2009 market low. It has returned 56% in 12 months and 9.4% in three. DuPont currently places as researchers' twelfth favourite Dow stock, receiving 10 'buy' calls, five 'hold' recommendations and no 'sell' ratings. Citigroup is bullish, expecting an advance of 22% to $65.
Credit Suisse forecasts a more modest increase to $58, ranking DuPont 'neutral.' DuPont trades at a trailing earnings multiple of 16, a forward earnings multiple of 13, a sales multiple of 1.5 and a cash flow multiple of 11, 25%, 24%, 47% and 23% chemicals industry discounts. Adjusted quarterly earnings rose 14%, beating consensus.
Alcoa's stock has gained 161% since the March low. It has rallied 23% in 12 months and 15% in three. Alcoa currently ranks as the fifth least-favourite Dow stock. Of researchers following Alcoa, nine, or 50%, advise purchasing its stock, seven recommend holding and two advocate selling.
Deutsche Bank offers the highest 12-month target, auguring a rise of 36% to $22. In contrast, RBC Capital, ranking the stock 'underperform', expects it to fall to $16. Alcoa sells for a forward earnings multiple of 11, a book value multiple of 1.2 and a cash flow multiple of 7.3, 73%, 65% and 58% industry discounts. Adjusted quarterly earnings beat analysts' consensus forecast by 12%.
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