• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Cramer: A Road Map for 'Dow 20,000'

This number is arbitrary, but for those who have latched onto it, here is a possible scenario that could get us there.
By JIM CRAMER
Dec 16, 2016 | 06:38 AM EST
Stocks quotes in this article: DIS, DD, HD, IBM, UNH, WMT, MSFT, JPM, DOW, AMZN, WDC

Which companies can take the Dow Jones average where it has to go? Who is fore-ordained to get the venerable one to 20,000?

First, before I go on, you need to know I am writing this with the idea that I think that whole idea that 20,000 is in the cards is a little silly, for several reasons. One, 20,000 means nothing other than a signpost that shows we are up more than 8% since the election and are about to hit a big round number. The percentage is outsized, the number is just a number.

Second, I almost feel like we are being drawn to this number like zombies from "The Walking Dead." Stalkers. I wish it didn't seem so inevitable, because it is stretching way too many stocks' valuations.

Third, it just seems so damned forced. I seriously do want stocks to do nothing for a bit. Shake some people out. Get rid of the momentum players.

Still, though, we all recognize the kind of swaggering "logic" behind the thrust.

So, to bow down for a moment to the altar of 20,000, here's a scenario that the uber enthusiastic -- and to some degree, I think, too enthusiastic -- bulls could use to get there.

First, at this point, it's really not as easy as you think to get this index to 20,000. Many of these companies in the last few weeks have given you an outlook that doesn't get you there, or are not Trump stocks -- think drugs -- or are so hamstrung by currency and higher interest rates that they may be regarded as shortfall candidates.

See columnist Rev Shark's take on "Dow 20,000" here.

But let me take an alphabetical swing at the roadmap and prospects that the 20,000ers may need to fall into place with the "logic" behind each one.

First is Disney (DIS) . This one's not all that hard. You start off with Rogue One, which is blowout. Then you start to hear about better theme park attendance. Then we get some sign that there is "something going on at ESPN" that neuters the bear story. Throw in something involving Disney's $1 billion investment in BAMtech, where the CEO Bob Bowman just yesterday stepped down, and you have a decent story that could take this stock to $110.

Next is DuPont (DD) . You have Ed Breen in there working tirelessly to get Dupont to merge with Dow Chemical (DOW) . One quick nod that the deal's about to get approval can probably get you to $80 from $75, which is it's 52-week high. Even a whisper will work. (DOW is a holding of Action Alerts PLUS)

Home Depot's (HD) been moving up relentlessly since that so-called disappointing last quarter, and I think that you can make a case that this is two-thirds a Trump stock, lower corporate taxes and deregulation -- sorry, it's a domestic company, so not a lot of overseas assets beyond North America.

Home Depot's got a bunch of things going for it:

1. Not at a 52-week-high.

2. A dearth of good retail non-apparel stories.

3. Deregulation means more building. Remember all it takes is for a story to be crafted.

IBM's (IBM) so easy to tell a compelling tale about. It is at 12x earnings when the average stock's at 20x. A yield of 3.3% when 10-years are still well below that. The fact that the company is moving aggressively to the cloud. Watson's getting talked about. Mostly sells and holds. That's a winning scenario.

UnitedHealth (UNH) doesn't need to do anything. The market, somehow, has seized on this health-care cost controller as the only really safe big-cap name in the space. The estimates are repeatedly too low. You know, it will figure out how to be a winner in the non-Affordable Care Act world. It's competitors have been so busy merging that they have taken their eye off the ball.

Easy peasy.

People want to own Walmart (WMT) . They are itching to do so. They don't even have a reason, other than it looks like it is always about to break out and because next year is Jet.com 's year. Walmart's the kind of stock where you can say, forever, "Hey, it's an investment year, they have to catch up to Amazon (AMZN) ," and therefore alibi any shortfall.

Finally, there's Microsoft (MSFT) . The market's liking cloud again. The market's liking big data. The market's liking gaming. Heck, after listening to Western Digital (WDC) , the market's even liking personal computers.

Microsoft has all of those. You can pile into it knowing that it's a winner on repatriation and on lower taxes.

Enough said.

You see how it can go here. You just need to buy into a thesis that says: "got some Trump, got no possibility of a shortfall, got some GDP growth, hasn't preannounced or given soft guidance," and you have a win. These are the stocks that can get us there.

Oh, and if they don't?

Then J.P. Morgan (JPM) , which has been tireless in its rally, will just have to take up the slack.

Okay the "logic" may be facetious. But I guess I am so sick of hearing "Dow 20,000" that I at least wanted to "google maps" it for you. And nothing more, because I wish there were better groundings than "stories." Yet, that's what it will take to get there in the last trading week of the 2016.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Investing | U.S. Equity | Financial Services | Consumer Discretionary | Healthcare | Technology | Markets | Consumer | Stocks

More from Consumer Discretionary

4 More Unloved Stocks Going Into My Latest Tax-Loss Selling Portfolio

Jonathan Heller
Dec 6, 2019 11:00 AM EST

We'll track a dozen beaten-up stocks that could be subject to tax-loss selling at the end of 2019 to see whether they can stage comebacks in 2020.

Ready, Set, Go: Nike Could Break Out to the Upside

Bruce Kamich
Dec 5, 2019 11:09 AM EST

Let's check the charts and technical indicators before we lace up a recommendation.

Sector Geography Lesson, Japan's Stimulus and Zooming In on Zuora: Market Recon

Stephen Guilfoyle
Dec 5, 2019 8:48 AM EST

Plus, the Saudis look to press their oil agenda while Europe prints some ugly economic data.

Mattel May Be Done Declining but the Bull Case Is Not Compelling

Bruce Kamich
Dec 5, 2019 8:41 AM EST

Let's review the charts.

It Was a Very Good Year for This Portfolio of 2018 Losers

Jonathan Heller
Dec 2, 2019 11:00 AM EST

The dozen stocks in this portfolio of companies that likely came under tax-loss selling pressure last year performed quite well as a group in 2019.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 11:02 AM EST BOB LANG

    Added Some Peleton

    This stock is starting to gain some traction, the ...
  • 01:06 PM EST CAROLYN BORODEN

    MRK and LVS Targets Coming Up

    View Chart » View in New Window »  LVS View C...
  • 12:01 PM EST BOB LANG

    Rolling Up Apple

    Just the other day we added some Apple calls on th...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2019 TheStreet, Inc., 14 Wall Street, 15th Fl, NY, NY 10005

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login