Barring an epic collapse, the Dow Jones Industrial Average is
likely to finish 2012 solidly in the green. As measured by the
SPDR Dow Jones Industrial Average (NYSE:
), the Dow tracking ETF, the venerable blue-chip index is sitting
on a year-to-date gain of 10.3 percent as of December 14.
That does not mean that all 30 of the Dow's components have
set the world on fire this year. As of December 14, four Dow
components - DuPont (NYSE:
), Hewlett-Packard (NYSE:
), Intel (NASDAQ:
) and McDonald's (NYSE:
) - are down for the year,
according to Finviz data
It is worth noting that that number is down from six Dow
losers for 2012 just a week earlier. Following up on a recent
look at what 2013
might have in store for some of the Dow's worst
, what follows is a look at how some Dow laggards may perform
next year. In this case, some of the laggards are stocks with
year-to-date gains that are below those of the Dow.
Johnson & Johnson (NYSE:
The Dow is home to three big pharmaceuticals firms - Merck (NYSE:
), Pfizer (NYSE:
) and Johnson & Johnson. One has stood out in 2012 and not
for good reasons. The standout is Johnson & Johnson because
the shares up "just" 7.8 percent. That is less than half the
returns offered by Pfizer and barely more than half of what Merck
has delivered to investors.
Things got so bad for J&J that even Warren Buffett's
Berkshire Hathaway (NYSE: BRK-A) has all but said enough is
enough. A few years ago, Berkshire owned about 45 million shares
of J&J. At the end of the third quarter, that number had
dwindled to 492,000
. That makes J&J one of Berkshire's smallest holdings in
terms of number of shares as of the end of the third quarter.
There is a bull case for the stock, one that
Barron's highlights in its most recent issue
. The company has $2.9 billion in cash, an AAA credit rating and
one at least one analyst has an $85 price target on the shares,
Barron's notes. That is well above the current level of just over
Of course the dividend is a source of allure with this stock,
too. The shares currently yield 3.4 percent and J&J has a
dividend increase streak that spans five decades.
Neither of the Dow's oil components have delivered gains worth
writing home about in 2012, but Exxon Mobil's 3.92 percent
increase sure looks good compared to Chevron's meager increase of
1.33 percent. Chevron's Latin America woes are a large reason
behind the company's doldrums.
The company is still grappling with an $18 billion judgment
levied against it by an Ecuadorian court last year. Alleging
rampant fraud and that it was unable to introduce critical
evidence in its defense, Chevron is fighting the judgment. As it
should. After all, the Ecuadorian legal system is not known to be
among the world's most advanced and $18 billion is a significant
chunk of Chevron's current $211 billion market cap.
However, the Ecuadorian issue still has not been put to bed.
At least the company is close to
reaching a resolution in Brazil
, where it is fined for issues relating to a 2011 spill at the
What Chevron has in its favor is
$21.3 billion in cash
. That is more than Exxon or Royal Dutch Shell (NYSE: RDS-A).
That cash hoard along with a recent shelf registration have
Chevron is planning a big acquisition
That remains to be seen. Chevron, often admired by peers for
its prudence, may not opt for a mega-deal, but a smaller deal for
firm such as Kosmos Energy (NYSE:
) is not out of the realm of possibility. Investors can afford to
be somewhat patient with Chevron. The shares yield 3.3 percent
and the company has boosted its dividend
for 25 consecutive years
(c) 2012 Benzinga.com. Benzinga does not provide investment
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