After reviewing two thirds of the thirty Dow Jones Industrials, I am surprised to find as much opportunity as I have and as there appears to be. I did not start out expecting to find much value, if at all, in the Dow. Yet, out of the nineteen stocks I've covered in the first four parts, I've found six possibilities in total ... and I still have eleven stocks to go.

Here are the value plays so far: Alcoa Aluminum (NYSE: AA), American International Group (NYSE: AIG), Caterpillar Inc. (NYSE: CAT), Disney (Walt) Company (NYSE: DIS), and Exxon Mobil (NYSE: XOM) and Home Depot (NYSE: HD). You can link to Part 1 of this series, Part 2, Part 3 or Part 4 for your own review and comments. Stocks 20 through 24 follow.

International Business Machines (NYSE: IBM) has been making some good moves lately and Wall Street has been reacting favorably. I have owned IBM shares several years ago and sold for a modest gain. The stock has been asleep for years and it looks fairly valued to me now. Very little of the data points I see stand out: IBM has an average P/E of 17.5, a lower than average yield of 1.5%. It does clear a good, not great, profit margin of 10.38%. The thing that looks most favorable about IBM, though, is its ROE, which is 30.25 (TTM) and far exceeds the P/E -- this has been a good indicator for me in the past. I would think most of its growth will be overseas but I do not see IBM moving at any faster rate than the index itself. There are many on Wall Street who disagree, pegging IBM as high as $175 per share in a few years based on its focus on higher margin software sales and service contracts, but I'd rather buy the index over the stock.

Continue reading Serious Money: Whittling away at the Dow - IBM, JNJ, JPM, MCD & MRK: Part 5

Serious Money: Whittling away at the Dow - IBM, JNJ, JPM, MCD & MRK: Part 5 originally appeared on BloggingStocks on Tue, 05 Jun 2007 11:47:00 EST. Please see our terms for use of feeds.

I have now completed reviewing half of the stocks in the Dow Jones Industrial Average in search of value. To my surprise five of the first fifteen seem to be value propositions, five appear to be fairly valued but upside potential does remain and the last five -- who knows? Serious Money: Whittling away at the Dow -- MMM, AA, MO, AXP, & AIG: Part 1 was published this morning. Parts 2 through 7 will follow daily.

After months of rising stock prices and new Dow record highs being reached on a regular basis, I was not expecting to find that there was any value left. I have been relatively optimistic since last year posting DOW 14,000 here we come! but the rate of increase has accelerated beyond what I envisioned.

James Cramer of the TheStreet.com early in the year wildly projected that the Dow would reach 14,000 this year. A year ahead of my own more tempered view, and I definitely thought he was going out on a limb at the time. Now it would seem easily in reach and perhaps what I thought was sticking my neck out was too conservative.

Perhaps it was the years of stagnating stock prices for Microsoft (NASDAQ: MSFT), J.P. Morgan Chase (NYSE: JPM), Citigroup (NYSE: C), General Electric (NYSE: GE), 3M Corp (NYSE: MMM) , International Business Machines (NYSE: IBM) and others that finally built up a head of steam and came alive in the last six to eight months. That and global expansion that all the large cap stocks are able to capitalize on. Well, investors and the sun are shining on the Dow so enjoy the ride and be ever watchful.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

To my surprise the Dow still has room to rise originally appeared on BloggingStocks on Tue, 29 May 2007 13:00:00 EST. Please see our terms for use of feeds.