Eight stocks may lead Dow to 20K
Investors look at what’s propelling market to new heights
Investors are never satisfied. Just minutes after the Dow Jones industrial average pierced 19,000 for the first time, investors eyed the 20,000 barrier and wondered which stocks might make it happen.
Eight Dow stocks, including sneaker maker Nike, drugmaker Pfizer and gadget maker Apple, are analysts’ favorites to propel the market higher to the never-- before-reached heights of 20,000, according to a USA TODAY analysis of data from S&P Global Market Intelligence.
Each of these stocks is expected to surge by more than 10% over the next 18 months, making them top drivers of the Dow’s attempted run to 20,000.
The Dow is on a rampage this year, jumping 9% to 18,993 through Tuesday’s close as investors start pricing in what a Trump administration’s pro-business measures might mean for the economy. Trump has vowed to boost government spending to jump-start the economy and roll back clean air and financial regulations, which is seen as being better for global growth.
Analysts are resoundingly bull- ish about the prospects for stocks under Trump. Analysts see 25 of the 30 stocks in the Dow being higher in 18 months than they are now. If analysts’ price targets prove correct they imply the Dow will be trading for 20,024 in 18 months, which would be a 5.3% increase from where the key market measure is now.
Apple is the stock that could have an outsized impact, because shares are trading for $112 and the Dow gives greatest weight to the stocks with the highest pershare prices. Shares of Apple have lagged this year, rising just 6.5%. Tech stocks, in general, haven’t been great performers since the election given that they rely so much on foreign manufacturing, and several tech CEOs have been vocal critics of Trump.
Trump has talked tough about cracking down on overseas production, which is another hurdle for tech companies. But analysts still think Apple will be worth $132 a share in 18 months, which would be 18% upside.
Investors have been largely focused on the negatives on a Trump presidency on tech stocks, says Scott Kessler, analyst at CFRA. But that has created buying opportunities across the sector, especially centered on “large-caps,” Kessler says, adding tech companies could benefit from Trump’s lower proposed tax rates. “We see a stronger U.S. economy and less regulation as good for bigger technology companies.”