As DJIA Heads to 14,590 in 2013, Five Undervalued and Five Overvalued Leaders (MSFT, UNH, AA, GE, KO, BAC, HPQ, JNJ, TRV, XOM, VZ)
Jan 7th 2013 8:46AM
24/7 Wall St. has identified its 2013 peak target for the Dow Jones Industrial Average of 14,590, which would translate to gains of more than 11.3% for investors. What is interesting is the breakdown of how Wall St. views each of the 30 DJIA stocks. Some stocks appear to be overvalued according to analysts and others appear to be undervalued. Last week we featured these individually, and now that everyone is back from their holidays, we are featuring these in one large consolidated piece.
As far as how we identified the least valuable and most undervalued DIA stocks, this was done in the same manner as how we calculated our DJIA 14,590 calculation. We used the Thomson Reuters consensus price target for upside or downside analysis. We also showed issues such as the dividend yields and market capitalizations on each. We have added color on these as well.
We have identified the five most undervalued of the 30 DJIA stocks. These include Microsoft Corp. (NASDAQ: MSFT), UnitedHealth Group Inc. (NYSE: UNH), Alcoa Inc. (NYSE: AA), General Electric Co. (NYSE: GE) and The Coca-Cola Company (NYSE: KO).
The overvalued DJIA stocks include Bank of America Corp. (NYSE: BAC), Hewlett-Packard Co. (NYSE: HPQ), Johnson & Johnson (NYSE: JNJ), and The Travelers Companies Inc. (NYSE: TRV). We had a virtual tie between Exxon Mobil Corp. (NYSE: XOM) and Verizon Communications Inc. (NYSE: VZ) until we identified which is better for investors relatively.
Microsoft Corp. (NASDAQ: MSFT) is shocking to see on the list as the most undervalued DJIA stock according to analysts. Despite the weak environment and despite Windows 8 not living up to expectations, analysts are more bullish on Microsoft than they were even a year ago. The $26.71 price at the end of 2012 implies upside of 28.9% to that $34.44 price target. This was truly a surprise to see as the most expected upside of the 30 components, and perhaps it shows that "upside" calls often may be a series of outliers rather than a series of assurances. That $34.44 target is even higher than the 52-week high of $32.95. Microsoft pays a dividend of 3.5%.
UnitedHealth Group Inc. (NYSE: UNH) is the newest of the DJIA components, now that Kraft Foods has split itself up. The health insurance giant closed out 2013 at $54.24, and that was well off the 52-week high, as its range in the past year was $49.82 to $60.75. Analysts believe that the stock will rise some 23.4% to $66.97 by the end of 2013. The insurer has a lower dividend than most DJIA stocks, at only about 1.6%, and its market value is close to $55 billion. UnitedHealth so far has recovered only about half of its losses from last summer.
Filed under: 24/7 Wall St. Wire, Active Trader, Analyst Calls, Dividends & Buybacks, Index, Personal Finance Tagged: AA, BAC, GE, HPQ, JNJ, KO, MSFT, TRV, UNH, VZ, XOM