Investors have faced tough times for years, and things only seem to be getting worse. As Europe stubbornly fails to resolve its problems and Washington gridlock threatens the U.S. economy as well, 2012 could be a dangerous time for the stock market.

In times like these, the key is to protect your capital. That doesn't mean dumping stocks entirely, but it does mean making sure you have the best-quality stocks you can find -- and weeding out ones that aren't making the grade. You simply can't afford to take on big risk when the rewards simply aren't there.

Today, I'm looking at five stocks from the Dow Jones Industrials (INDEX: ^DJI) for which the consensus of analysts expects the worst returns next year. Those five Dow stocks are as follows:


Current Price

Target Price

Expected Gain

Expected Sales Growth

Expected EPS Growth

Verizon (NYSE: VZ) 38.42 39.14 2% 4.1% 15.9%
IBM (NYSE: IBM) 187.48 196.00 5% 3% 10.1%
McDonald's (NYSE: MCD) 98.14 103.48 5% 5.6% 9.6%
Wal-Mart (NYSE: WMT) 57.95 61.70 6% 5.2% 9.4%
Home Depot (NYSE: HD) 39.42 42.24 7% 3.4% 14.2%

Source: Yahoo! Finance. Prices as of Dec. 15 close.

Several of these stocks also made our list of Dow stocks that made investors happy in 2011, so no one's saying that these companies don't have strong businesses. But with so little upside potential, it's entirely possible that the shares have already run their course -- and if an overall downturn in stocks does happen, then these past winners could be the first on the chopping block.

Even though you shouldn't just sell first and ask questions later based simply on pessimistic target prices, it gives you a good way to focus your research. So let's take a closer look at these five stocks to find out what else we can learn.

Are analysts too pessimistic?
That's the way to look at those stocks from the bearish perspective, which the consensus of analysts seems to favor. While analysts make plenty of mistakes, they're more often too rosy in their outlooks than too dour.

Still, with these stocks appearing fully priced, the slightest bad news could send them reeling. With such high expectations, you might want a stock that gives you a bigger margin of safety for next year.

To find exactly those kinds of stocks, I have a suggestion: Check out this free special report from the Motley Fool, which details five stocks that the Fool owns for its own portfolio. We think you should own them, too, but you can't buy them if you don't know what they are. So check out these stock ideas for yourself.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.