Here are the six Dow stocks experts say have the most upside

Stocks on Wall Street have surged higher this year, with double-digit gains in the past 12 months for the Nasdaq, S&P 500 and the Dow Jones Industrial Average. While analysts caution that many stocks may be overpriced, there are still some good investments out there and this year looks good for more upward movement in the larger markets.

The Dow has surged nearly 7 percent year-to-date, with a more than 18 percent gain in the past year. Two experts we talked to suggested six of the Dow 30 component stocks as good choices for investing now, if someone wanted to eye the big stocks. Among those are tech giants Apple Inc. and Intel Corp., along with energy giant Chevron Corp., industrial manufacturer Caterpillar Inc., banking and finance titan JPMorgan Chase, as well as retailer Wal-Mart Stores Corp.

Of those six stocks, Walmart (NYSE: WMT), Apple (Nasdaq: AAPL) and Caterpillar (NYSE: CAT) have already posted big gains this year so far. Two of the others, Intel (Nasdaq: INTC) and JPMorgan (NYSE: JPM), both have been up and down after initially posted gains in the spring before giving back some ground. Chevron (NYSE: CVX) is the one of those stocks that has been steadily down this year, but with oil prices creeping back up of late it appears to have potential.

“The biggest threats to the current bull market are geopolitical (North Korea, political scandals, etc.) and a failure to revise and reduce tax rates for U.S. businesses,” said Rob Russell, president of Russell Total Wealth Management in Fairborn. “Barring these threats, the U.S. stock markets will likely take a breather during the summer and then climb higher throughout the remainder of the year, with a yearly return in the 9 percent to 13 percent range.”

“Undoubtedly, many stocks are already overbought and expensive, but even at these dangerously high levels it is possible for the market to continue to climb higher,” Russell said. “Eventually, reality will be priced in and the market will experience a correction, which is why it’s prudent to begin diversifying your portfolio outside of common stocks and bonds by including Private Equity and Opportunistic Real Estate.”

Chevron— with a 4% dividend and a recent earnings turnaround this could be a great value play. In essence, you get paid to wait for oil prices to recover and plenty of upside in the stocks’ price.

Caterpillar— you can’t repair America’s infrastructure without heavy construction equipment and that’s where CAT comes in. Their other product lines of gas and diesel engines, mining equipment, and locomotives should benefit greatly by Federal, State, and Private industry infrastructure and construction spending in the coming years. Although the stock price is fairly valued you get a nice 3% dividend to be patient while orders for equipment begin to flood in.

Apple— the obvious choice of the 30 Dow stocks due to a big upcoming product launch and hoards of cash scheduled to be invested. The move to their new 5 billion dollar headquarters will help to spur new and exciting product development and collaboration among their 12,000 employees. Although Apple’s dividend is relatively low at 1.5% currently, it’s likely to increase in the coming years.

Source: Bloomberg Pro Terminal

Senan Fuchedzhiev - Trader

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