3 Top Dow Stocks for 2012


While it's still early enough in 2012 for us all to feel like fortune-tellers, it's time to read the tea leaves and make bold bets about which components on the Dow Jones Industrials Average (INDEX: ^DJI) will outperform for 2012. After a rigorous reading of the stars coupled with a strenuous gut check, I've awarded the following three companies the coveted title of Top Dow Stock for 2012.

  • Bank of America (NYS: BAC) . The largest bank in the U.S. was the worst-performing Dow stock of 2011, but it's already erased most of its 2011 loss, and it's only a few weeks into the year. Considering that the bank trades at a historic low price to book of 0.3, this one has the legs to run up for the next year.

  • Already the second-best-performing Dow stock of 2012, Caterpillar (NYS: CAT) has the momentum and macro backdrop to continue digging up profits for investors through this year. A highly cyclical business that swings with emerging-market performance, Caterpillar has indicated great things to come with its recent blowout earnings.

  • With big tech as cheap as it is, how could I leave tech titan Intel (NAS: INTC) off this list? With its 3% dividend, great track record, and cheap multiples, what's not to love here?

One more stock for 2012
As great as these companies are, there is one stock I'm more bullish on for 2012. I'm not the only one, either: Our chief investment officer has dubbed this winner "The Motley Fool's Top Stock for 2012." I invite you to get free access to this top pick today by clicking here.

At the time thisarticle was published Austin Smith owns no shares of the companies mentioned here. The Motley Fool owns shares of Intel and Bank of America.Motley Fool newsletter serviceshave recommended buying shares of Intel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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