by Jeff Reeves | December 20, 2011 2:45 pm
The Dow Jones Industrial Average turned 115 years old this year, and while the index comprising just 30 big-name companies is assuredly a flawed measure of economic activity and the stock market, it’s one of the most widely cited numbers in all of investing. The Dow Jones index tells the story of the markets every day, whether you like it or not.
So what Dow component did best in 2011, and which performed worst? Let’s take a look:
McDonald’s (NYSE:MCD) has been a top performer for some time now, and kept up its winning streak in 2011. This leading component has tallied 2011 returns of almost 29% as of this writing — and it sports a delicious 2.8% dividend yield to boot! Strong emerging market sales and continued strength at home with its Dollar Menu, McCafe specialty beverages and other promotions continue to propel this dominant fast-food juggernaut even higher.
The real question, however, is whether McDonald’s is overbought after big gains this year, and up over 120% since 2007. Maybe. . .but maybe not. Growth guy Louis Navellier thinks McDonald’s is a top dividend stock to buy. InvestorPlace.com writer Jim Woods agrees.
Of course, there’s more than one way to trade McDonald’s. The recent IPO of franchisee Arcos Dorados (NYSE:ARCO) — yes, that’s “golden arches” in Spanish — gives investors a direct play on MCD in emerging markets. And ARCO is one of InvestorPlace.com’s 10 Best Stocks for 2012.
Bank of America (NYSE:BAC) is perhaps one of the most hated companies in America. It is also one of the worst possible investments you could have made this year — with shares off about 61% as of this writing, and plumbing depths not seen since the bear market lows of March 2009.
The reasons for the decline are obvious: denial of a dividend increase earlier this year, a race to divest assets to meet capital requirements, continued bad debt from foreclosures and other headlines you should know by now. But is it a time to call a bottom in BAC, or will shares continue to slump?
Well, by some estimates, Warren Buffett has lost about $1.5 billion on his BofA trade. If the Oracle of Omaha can get burned like that buying when Bank of America traded for a “bargain” price of $6 a share, you better understand the risks of dumpster diving in this financial stock.
Of course, these are the outliers. Most Dow stocks didn’t really put up a lot of fireworks this year. The overall index is up about +3.9% as of this writing, with 17 out of 30 components posting positive returns since the first of the year. Shares largely were pretty stable, with 16 of 30 components posting gains or losses of less than 10% either way.
It’s worth noting that the biggest numbers did come on the wrong side for components, however, with returns of -42.7% from battered aluminum giant Alcoa (NYSE:AA) and -38.2% for Hewlett-Packard (NYSE:HPQ) after revealing itself as one of the worst-run corporations in America. Aside from these stocks and Bank of America, no Dow stock moved more than 30% on the year up or down.
Here’s a complete rundown of all 30 components, if you’re interested.
Returns are as of Tuesday, Dec. 20.
3M (NYSE:MMM): -7.4%
Alcoa (NYSE:AA): -42.7%
American Express (NYSE:AXP): +10.1%
AT&T (NYSE:T): -1.0%
Boeing (NYSE:BA): +10.7%
Bank of America (NYSE:BAC): -60.5%
Caterpillar (NYSE:CAT): -3.1%
Cisco (NASDAQ:CSCO): -6.7%
Chevron (NYSE:CVX): +15.9%
Coca-Cola (NYSE:KO): +3.5%
Dupont (NYSE:DD): -9.8%
Exxon Mobil (NYSE:XOM): +12.7%
General Electric (NYSE:GE): -2.5%
Home Depot (NYSE:HD): +18.3%
Hewlett-Packard (NYSE:HPQ): -38.2%
IBM (NYSE:IBM): +26.5%
Intel (NASDAQ:INTC): +13.2%
Johnson & Johnson (NYSE:JNJ): +3.9%
JPMorgan Chase (NYSE:JPM): -25.0%
Kraft Foods (NYSE:KFT): +17.0%
McDonald’s (NYSE:MCD): +28.3.
Merck (NYSE:MRK): +2.3%
Microsoft (NASDAQ:MSFT): -7.0%
Pfizer (NYSE:PFE): +21.3%
Procter & Gamble (NYSE:PG): +2.2%
Travelers Companies (NYSE:TRV): +4.1%
United Technologies (NYSE:UTX): -5.9%
Verizon Communications (NYSE:VZ): +9.0%
Wal-Mart Stores (NYSE:WMT): +9.0%
Walt Disney Company (NYSE:DIS): +4.5%
Jeff Reeves is the editor of InvestorPlace.com. Write him at firstname.lastname@example.org, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.
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