The 4 Dow Stocks Up Big in 2012

It's early in the year, but four Dow (INDEX: ^DJI  ) stocks (out of 30) have started the year out with double-digit gains:

Company

Gain So Far in 2012

Bank of America (NYSE: BAC  ) 22.1%
Alcoa (NYSE: AA  ) 14.8%
Caterpillar (NYSE: CAT  ) 12.5%
JPMorgan Chase (NYSE: JPM  ) 10.8%

Let's put that in context. The Dow overall is up 2.1%. And the biggest loser so far, Coca-Cola, is down only 3.4%.

Put a different way, these four winners have each averaged gains of over a percent for the first eight trading days of the year. Not bad for a bunch of boring blue chips, eh?

Of course, lowered bases have a way of boosting returns. Each of the four is coming off a down year in 2011:

Company

2011 Stock Price Loss

Bank of America 58.3%
Alcoa 43.8%
Caterpillar 3.3%
JPMorgan Chase 21.6%

Not quite as impressive given that context.

As a shareholder of both B of A and JPMorgan, I can tell you that 2011 hurt much more than this 2012 mini-rebound has helped, but let's delve into the "whys."

All four companies are tied to the health of the global economy and swing around more than average with the daily manic movements of the market. A beta of 1 means that you move at the same volatility as the market. JPMorgan is at 1.58, and the other three are above 2.

Bank of America has had a rougher go of it than JPMorgan. Both are global megabanks combining Main Street and Wall Street banking. But while JPMorgan has managed to stay a relative market darling (as far as beaten-down banks go), Bank of America has been separated from the herd. You can see that in the way B of A was singled out in the Occupy Wall Street protests, the media attention of its attempt to charge a monthly fee for debit card usage, and its laggard stock price over the past few years.

While the banks and Caterpillar haven't had much major company-specific news -- they've just been moving with market sentiment -- Alcoa led off earnings season on Monday. Although it reported a loss, its outlook for aluminum demand was favorable enough to keep the stock moving up.

As a final bit of caution: Remember that we're looking at very short-term trends here. Pay attention to the news that affects long-term company prospects and invest for the long term.

If you're looking for a long-term stock pick, our chief investment officer has identified his No. 1 stock for the next year. Find out which stock he likes in our brand-new free report: "The Motley Fool's Top Stock for 2012." I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company.

Anand Chokkavelu owns shares of Bank of America and JPMorgan Chase. He also owns warrants in JPMorgan Chase and long-dated options in Bank of America. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Coca-Cola. Motley Fool newsletter services have recommended buying shares of Coca-Cola. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On January 13, 2012, at 9:21 AM, nickjob wrote:

    JPM is an accessory to a robbery ( with mf global). Who would want to invest in a thief?

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