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Best Performing DJIA Stocks of Q2 May Have Valuation Concerns Ahead

The Dow Jones Industrial Average may have seen its volatility pick up lately, but we are technically still in a bull market, with gains of 13.7% so far in 2013. Second-quarter performance ended up almost 2.3%, at 14.909.60. 24/7 Wall St. already evaluated the five worst performing DJIA stocks of the second quarter, but we also wanted to see what the best DJIA stocks were in the period.

We have reviewed the top performing stocks of the second quarter and added in color on each. We have included the consensus analyst price target as well, so investors can see how much implied upside exists in each of these stocks. The DJIA remains well above what we gave as a consensus price target of 14,590 using our own model for this year. What likely will stand out here is that many of these DJIA stocks that performed the best are either above or within just a few percentage points of their consensus analyst price targets from Thomson Reuters.

Read also : The Five Worst Performing DJIA Stocks of Q2 2013

Microsoft Corp. (NASDAQ: MSFT) may have problems with slow PC sales and with Windows 8 being a disappointment, but it was the top DJIA performer of the second quarter. Its stock closed at $34.54 for a 21.57% gain. Analysts have a consensus price target of $35.32, so shareholders have a lot of gains riding on the line, based on July earnings season.

Boeing Co. (NYSE: BA) has resumed its 787 Dreamliner flights now that the battery issue has been resolved. Shares have responded handily to new highs. Shares closed at $102.44 for a gain of 19.9% for the quarter, and analysts have a consensus price target of $114.17 for Boeing.

Cisco Systems Inc. (NASDAQ: CSCO) remains on the recovery trail after restructuring and trying to become more focused. Shares responded well after earnings to close up 17.4% for the quarter at $24.34. Investors will need to pay close attention here on analyst calls because the consensus price target is up only at $25.19.

UnitedHealth Group Inc. (NYSE: UNH) recently gave a better dividend and upped its share buybacks. It seems counterintuitive that a health insurance player would rise, but that has been the case over and over. Its gain was 14.9% to close out at $65.48 for the second quarter, and the consensus analyst price target is $70.25.

Intel Corp. (NASDAQ: INTC) also has managed to overcome slow PC sales. The company is now winning in contract manufacturing capabilities for outside chip companies, and Intel has even started getting orders for smartphone processors that it has missed out on for three years or more. Its second-quarter gain was a hair under 12% to close at $24.23, but note that the consensus price target is lower at $23.70.

J.P. Morgan Chase & Co. (NYSE: JPM) may seem surprising on the list, considering that some investors were very vocal in splitting Jamie Dimon’s role as chairman from his CEO role. The London Whale issues are now more than a year ago, and investors have been optimistic again. The biggest bank by assets rose by 11.9% in the quarter to close at $52.79, and the consensus analyst price target is $57.70.

Home Depot Inc. (NYSE: HD) actually is down almost 5% from a 52-week high, but its business is doing well with the housing recovery. Its gain was 11.5% to $77.47 in the quarter, and analysts have a consensus price target of $85.14 for the home improvement product giant.

American Express Co. (NYSE: AXP) was a top performer as well, as its higher-end customers are doing better than the rest. It remains puzzling here that the dividend is only 1.2%, as it is low for a DJIA stock and for a key financial stock. The second-quarter gain was 11.1% to $74.76, although investors might want to pay attention because the consensus analyst price target is $73.61.

Walt Disney Co. (NYSE: DIS) is down close to 5% from its recent all-time highs, but the excitement behind adding Star Wars to the movie and product mix has shareholders excited. The Mouse House’s stock price rose by 11.1% in the second quarter to close at $63.15, and the consensus analyst price target is still indicative of double-digit gains ahead at $72.00.

This remains in a bull market, but the recent choppiness is shaking the nerves of many investors. Some have still missed out on the market gains and now they are starting to lose money in their longer-dated bond portfolios. This may drive them to look at these and other stocks with long track records where the share prices may be perceived to be on sale.

We included a chart below from Finviz.com to show how the best performing stocks of the quarter compare to the year. We used Yahoo! Finance closing prices for performance measurements, and the total returns for the quarter that we used include dividend adjustments, and that has caused a slight performance difference from the Finviz chart.

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