The Dow Jones Industrial Average
Today's Price Change
Bank of America
Why, you ask, did shares of these three companies take off?
After a string of positive economic news in recent weeks, investors are placing their bets on the stocks that could outperform the most strongly should the economy pick up in 2012. Cyclical sectors outperformed the market, with materials, financials, and transportation coming out on top.
Banking stocks like BofA, JPMorgan Chase, and Citigroup
Similarly, aluminum demand and pricing depends heavily on economic growth. This week, Alcoa reported that it expects global demand for the metal to increase 7% in 2012.
Another issue that sets these names apart is that they are among the cheapest stocks in the Dow. All three got torched by more than 20% last year. Alcoa trades for 10 times earnings, while BofA and JPMorgan Chase trade for 0.5 and 1.1 times tangible book value, respectively. The average Dow stock trades closer to 15 times earnings.
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