Last year was a huge one for the stock and bond markets. The bull market in equities has come close to being eight years old, and the Dow Jones Industrial Average rose by 13.4% for the year. What matters at the start of each year is not just what happened in the prior year, but what should be expected in the year ahead. 24/7 Wall St. has reviewed and followed industrials and conglomerates for many years due to their importance in the economy.

It turns out that being a conglomerate can cut both ways. Having business diversification can limit big pops from any one area, but diversification also can prevent huge negative events from any one business aspect. General Electric Co. (NYSE: GE) remains the largest conglomerate, but the reality is that United Technologies Corp. (NYSE: UTX) and 3M Co. (NYSE: MMM) are both far more important to the Dow Jones Industrial Average weightings due to having far higher share prices.

It also turns out that GE underperformed the Dow and that 3M and UTC both outperformed it in 2016. What stands out now is that analysts remain more positive about GE’s upside than they do 3M or UTC. Still, the Thomson Reuters consensus analyst target prices call for upside in all three Dow conglomerate stocks. Again, what matters now is what lies ahead for these Dow conglomerate stocks.

Here is what investors might want to expect in a bull/bear analysis for GE, 3M, and UTC in 2017.

General Electric

GE generated just a 4.6% total return in 2016 and it closed at $31.60 a share on the last day of the year. Still, GE is expected to be an industrial winner from infrastructure and domestic production of goods, making it a Trump-friendly stock. Its return of 7.5% in the fourth quarter alone and the larger annualized dividend were what allowed GE shares to post a slightly positive year for its shareholders.

GE’s 12-month consensus analyst price target is $33.86, and its $31.60 year-end price would imply upside of 7.1%. Then there is the 3% yield to consider, for an implied total return of just over 10%, if the analysts prove to be right.

GE’s deal with Baker Hughes Inc. (NYSE: BHI) was a potential game changing event for the GE Oil & Gas unit. The deal is large, but it is expected to get approved. By making Baker Hughes a GE outfit but keeping it an independent public company, GE also now opened up the possibility for one massive spin-out in the years or decades ahead, if GE wants to do so — a move not expected at this time. GE has moved increasingly away from being a conglomerate dominated by a financial outfit. Its new focus will be to finance industrial customers, but GE’s endless exposure to consumer finance is not going to dominate the company ahead.

GE’s infrastructure business should do well under the Trump administration; ditto for its oil and gas operations. Its clean energy operations now remain a wild card as Trump’s view on energy is so different from Obama’s. Jet engines and the servicing of those engines are likely going to be a huge contributor ahead for GE. Its industrial internet effort has been making strides as well.

GE also has been buying back massive amounts of stock. That has actually kept the company from increasing its dividend, and GE has had to somewhat temper its ambitions of $2.00 in earnings per share (EPS) in 2018. At the end of 2016, the consensus estimate was $1.93 per share for 2018. If GE’s target is hit, then it is valued at almost 16 times expected 2018 EPS. Investors should not expect another GE dividend hike until the end of 2017 or even the end of 2018.

One call that stood out came in December, with Sanford Bernstein raising GE’s rating to Outperform from Market Perform with a $40 price target. What also stood out was that GE’s short interest surged toward the end of 2016, which is generally viewed as an expectation that a share price may fall.

While this is the largest conglomerate by market cap, note that GE’s index weighting in the Dow is just 1.1% at the start of 2017. That ranks it as 29 of 30, and it means that if GE-specific news does not spill over into rivals and industrials, then GE’s tiny weighting means shares could double and it would not move the Dow very much, if the other components were to somehow remain flat.

GE has a 52-week trading range of $27.10 to $33.00 and a market cap of $281 billion. Its dividend yield is 3.0%. Can GE generate twice the return for shareholders in 2017 than in 2016? Stay tuned.

3M

3M returned over 21% for shareholders in 2016, with a closing price of $178.57 on the last day of December. The stock ended the year at $178.57 per share, and it had a consensus price target of $184.60 to start the new year. That would imply upside of about 3.4%, but the 2.5% yield would make that an implied upside of 4.9%, if the analysts are accurate in their 2017 forecasts. Is it a case in which 3M’s outperformance of 2016 ate into 2017 gains?

3M’s most recent earnings report was not one of a shareholder gain, even though earnings were OK. Two analyst calls in 3M shares stood out from December: RBC raised its rating to Sector Perform from Underperform with a $171 price target, effectively removing a “Sell” rating. And Stifel maintained its Hold rating but raised its target to $186 from $175. Still, those calls followed a November downgrade by Goldman Sachs to Sell from Neutral with a mere $159 price target.

As for a valuation, 3M is valued at about 20 times expected 2017 EPS. Still, that is valued at just about 17 times expected 2019 EPS. 3M is a chronic hiker of its dividend, and that dividend is expected to rise north of $5.00 per share by 2019.

One thing to consider is that 3M has many opportunities to make acquisitions and divestitures. The company has so far avoided larger mergers, but it did just recently complete the sale of its safety prescription eyewear business. The company’s guidance issued in December for its 2017 outlook was for earnings of $8.45 to $8.80 per share, and its shares had a decent December performance without any major blowups after that guidance.

3M is very important to the Dow Jones Industrial Average. Its high share price makes it the second largest weighting of the 30 Dow components, with a 6.1% index weighting.

3M has a 52-week range of $134.64 to $182.27 and a market cap of $107 billion. Its dividend yield is 2.5%.

United Technologies

UTC generated a 17% return for shareholders in 2016, with a December 30 closing price of $109.62. About half of its gains were in the fourth quarter alone. This closing price would represent 5.1% in implied upside to the consensus analyst target price of $115.21, or a total return opportunity of 7.5%, if you include the conglomerate’s 2.4% dividend yield.

It is hard to know if this will matter psychologically, but there was a UTC role in Bombardier’s recent layoffs. There is also always the potential for a larger merger here, as it was not that long ago that Honeywell International Inc. (NYSE: HON) was discussed for merger possibilities. That deal seems dead and gone, but management change in the years ahead could perhaps change that.

One recent analyst call in UTC shares stood out. Credit Suisse raised its rating to Outperform from Neutral and raised its price target to $125 from $108 in December. UTC is also a defense contract winner for 2017.

UTC has a 3.8% weighting in the Dow as we enter 2017. That ranks it 12th of the 30 Dow stocks because of its share price.

The 52-week range is $83.39 to $111.69, and the market cap is $91 billion. UTC has a dividend yield of 2.4%.

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