The Dow Jones Industrial Average hit a new high this week, and the new closing high is 14,253.77. We originally came up with a top price target for the DJIA of 14,590 for 2013 based upon our own DJIA analysis and methodology. We now expect that number to be surpassed, even if we have not officially raised the target. The reality is that by our take it will only require the top seven of the 30 DJIA stocks to perform this year for the DJIA to hit 15,000.

International Business Machines Corp. (NYSE: IBM), Chevron Corp. (NYSE: CVX), 3M Co. (NYSE: MMM), McDonald’s Corp. (NYSE: MCD), United Technologies Corp. (NYSE: UTX), Caterpillar Inc. (NYSE: CAT) and Exxon Mobil Corp. (NYSE: XOM) will likely be the seven stocks of the 30 DJIA components that lead the index to 15,000. At issue is that the DJIA is a price-weighted index that does not care about the market capitalization. These seven DJIA stocks account for 43% of the entire weighting of the 30 DJIA components.

For instance, General Electric Co. (NYSE: GE) has a $245 billion market cap, yet its $23.59 share price generates a weighing of only 1.27%. Then you have 3M Co. (NYSE: MMM) with a 5.63% weighting because its price is $104.45, and United Technologies Corp. (NYSE: UTX) has a 4.9% weighting in the DJIA because its price is $89.13. Combined, two these companies have a market cap of $159 billion. So GE is worth almost 150% of the market cap, but its weighting in the DJIA at 1.27% compares to the combined weighting of 10.73% for 3M and United Tech. Now you know how silly the DJIA can be as an index, even if investors are usually referring to the DJIA when they say “the market.”

If you took the bottom seven DJIA components, you barely get a 7% combined weighting in the DJIA. These stocks could all double in a static scenario, where the other stocks remain the same, and you would barely get close to the 15,000 mark.

A review at IndexArb.com shows just how much these weightings matter, with a cumulative weighting after each component:

1) IBM 11.13; 11.13
2) Chevron 6.35; 17.48
3) 3M 5.63; 23.11
4) McDonald’s 5.16; 28.27
5) United Technologies 4.90; 33.17
6) Caterpillar 4.86; 38.03
7) Exxon Mobil 4.83; 42.86

International Business Machines Corp. (NYSE: IBM) is at $206.53, against a 52-week range of $181.85 to $211.79. The consensus target price is $225.75, implying an expected gain of 9.3%. IBM’s dividend yield is 1.7% but has been rising, and the company keeps buying back stock. Warren Buffett has bought a large stake that is likely to rise as well.

Chevron Corp. (NYSE: CVX) trades at $117.93, against a 52-week range of $95.73 to $118.53. Its consensus target price is $124.51, implying upside of 5.6%, and it has a 3.1% dividend yield. Imagine if oil demand is even a tad higher than expected in 2013, or that even the forecasts for global oil demand go up in 2014 when the broader global economy is expected to be stronger. Chevron is likely to go to all-time highs, and it is expected to raise its dividend in the coming weeks.

3M Co. (NYSE: MMM) is at $104.45, against a 52-week and all-time high of $104.81. Analysts have a price target of only $106.33, for a gain of close to 2% expected. The problem is that analysts have been slow to lift their price targets here, and 3M’s 2.4% dividend has been raised over and over and has much more room to grow. The trick is that the highest price target from analysts is $125, so some are already much more bullish here. If 3M hits $115, that is effectively a 10% gain. Plus that 2.4% dividend helps out as well.

McDonald’s Corp. (NYSE: MCD) trades at $95.81, against a 52-week range of $83.31 to $100.44. This was the best DJIA stock of 2011 and was the worst of 2012. The fast-food giant’s consensus price target of $99.82 implies upside of only 4.2%, but there is a 3.2% dividend, and the old consensus price target back before the 2012 sell-off was closer to $110. If McDonald’s gets its growth back with its healthier choices and affordable meals, there is more than 10% upside at the Golden Arches again.

United Technologies Corp. (NYSE: UTX) trades at $89.13, against a 52-week range of $70.71 to $91.51. The consensus price target of $96.47 already implies 8.2% upside, and there is the 2.4% dividend yield as well. The highest analyst target is $105, and the analysts have not been aggressive in raising their targets yet. That implies 18% upside to the street-high target.

Caterpillar Inc. (NYSE: CAT) trades at $90.21 and has been dragged down by emerging market and China growth. The consensus price target is back up at $111 now, implying upside of 23%. There is also the dividend of 2.3% that has a lot of room to grow if the company wants, and we would point out that Caterpillar shares have already traded at $114.25 in the past year. This one does not even have to hit a new high for the analysts to be right here.

Last on the list of seven stocks is Exxon Mobil Corp. (NYSE: XOM). At $89.61, it has a 52-week range of $77.13 to $93.67. Analysts have implied upside of 5.5% with the $94.51 price target, but there is a 2.5% dividend yield and its dividend is also expected to be raised in the coming weeks. If global oil demand forecasts are raised later this year for 2014 as the global economy is expected to recover, then the street-high analyst target price of $105 is suddenly much more realistic, and that would bring gains of 17%, plus the higher dividend.

It is almost sad the way that the DJIA is calculated. That being said, the rest of the 23 DJIA components only have to remain relatively the same while these top seven DJIA components only have to live up to expectations. That gets you to right at DJIA 15,000.

Here is something else to consider. These seven great stocks will not really perform in a vacuum, because that is not how things work in real life. That being said, if the rest of the market performs and the economy recovers as expected, then you could be looking at DJIA 16,000 at some point in 2014.

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