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Thursday, December 27, 2012

2013 Dow stocks not to buy (HPQ, INTC, MCD, CAT, AA)

Hewlett-Packard Co. (NYSE: HPQ) was a runner-up for the more properly named Dogs of the Dow for 2013, but that is solely because it was such a poorly performing stock in 2012. With this stock at $14.01, its shares are down about 44% in 2012. HP has a 52-week range of $11.35 to $30.00 and its yield is 3.78%. Analysts have a consensus target of $13.53 on HP, but the stock has fallen so much that we consider this an abandoned company due to its deep troubles. What can fix HP at this point? A miracle, or a sudden revolt against Apple products.

Intel Corp. (NASDAQ: INTC) is a member of the Dogs of the Dow, and its yield has risen handily due to the poor performance of its shares in 2012. At $20.64, this chip and processor giant has fallen by about 12% in 2012, and its dividend yield is 4.36%. The 52-week trading range is $19.23 to $29.27. and the consensus price target is $23.14. Intel has significant challenges ahead with PC sales sucking wind. Intel is just not even acknowledged as having any presence yet in smartphones and mobile devices.

McDonald’s Corp. (NYSE: MCD) had a poor 2012, but that was after it was the single best performing stock of the 30 DJIA stocks in 2011. At $88.29, this stock is down about 8% so far in 2012. Things were looking far worse just a few weeks ago when the stock was sliding daily. Its 52-week range is $83.31 to $102.22, and its yield is 3.4%. What is amazing is that analysts still have a consensus price target north of $97 for this fast-food giant.

Caterpillar Inc. (NYSE: CAT) is currently on the list of the Pigs of the Dow because it is in negative territory so far in 2012. At $87.48, this one is down in part because of its ex-dividend date being right at the end of December, and due to shares selling off so much due to a weaker macro and emerging market picture. If you adjust the share price for dividends, the stock is down only 0.8% and it only has to get back above $88.20 for it to be positive, if you back out the dividend payments. On a nominal basis, this one closed out at $90.60 in 2011. Analysts have a consensus price target of $97.93 for a year out and its 52-week range is $78.25 to $116.95.

We have one other company as a runner-up for the worst performing DJIA stocks of 2012. That means that if its shares drop in the next three sessions then this one could make the list of the Pigs of the Dow for 2013. Alcoa Inc. (NYSE: AA) just has refused to do anything in 2012. At $8.62, this stock is up less than 1% in 2012, and its 1.4% dividend yield is just not very impressive for a company that many investors believe is not representative of a DJIA stock any longer. Analysts have an upside price target of $10.41 on this, so maybe a recovery of any sort would be a great harbinger in 2013

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