This past week brought yet another swing taking the Dow Jones Industrial Average (DJIA) to within 30 points or so of an all-time record high. The high remains 16,631.63, and the highest print this week was 16,604.79. Investors should consider one thing here — this is still less than a 1% gain for 2014, without dividends, for the DJIA.

Still, there may be more good news than bad news. As of mid-Friday, there were 19 DJIA winners, versus 11 losers, so far in 2014. Also, the four biggest losers on a percentage basis were dwarfed by the four biggest winners.

24/7 Wall St, wanted to review the four best Dow stocks so far in 2014. Performance metrics were taken from FINVIZ.com and valuation metrics were used from Thomson Reuters and Yahoo! Finance. As a reminder, many investors are still wondering about, or worried about, a Sell in May and Go Away theme all over again.

Merck & Co. Inc. (NYSE: MRK) was the leader of the Dow so far in 2014. Who would have guessed that the old Big Pharma giant would be up 20% Friday? The pharmaceutical company’s latest earnings looked mixed, with slowing sales. Also, our bullish and bearish case for Merck showed that it rose by almost 27% in 2013. At the start of the year, analysts were calling for upside of only 2.3%.

While Merck was up almost 20% going into Friday, a 2.4% drop on negative ovarian cancer drug tests had shares up closer to 17% late on Friday. The $58.25 share price is now 1% shy of the consensus analyst price target. Merck pays a 3.1% dividend yield, and its valuation is about 16.6 times expected 2014 earnings.

ALSO READ: Companies With the Best (and Worst) Reputations

Caterpillar Inc. (NYSE: CAT) has to be truly the one big surprise for 2014. Its prospects were dimming in 2013, yet it is the second best performer in 2014 of all Dow stocks. A miniscule gain to $105.20 as of late Friday had shares up right at 17% so far in 2014. Cat’s recent earnings set it up for 52-week highs, despite the notion that so much good news seemed already factored in ahead of the report.

The bullish and bearish case for Caterpillar at the start of January was far less optimistic. In fact, it was among the worst Dow stocks in 2013. Analysts barely had a $90 consensus price target at the time, yet here we are above $105. Now the consensus analyst target is up just above $111. Investors reap a 2.3% dividend yield, but investors have to pay nearly 17 times expected 2014 earnings for Caterpillar today.

Johnson & Johnson (NYSE: JNJ) did not have the hallmarks of being the third best performer of the 30 Dow stocks at the start of this year, yet the stock’s gain was above 10%, before a 1.3% drop as of late Friday. At $99.20 as of late Friday, J&J was another winner in earnings season pointing to new highs. This remains despite outside efforts still targeting J&J product woes of the past. J&J also trades at close to 17 times expected 2014 earnings. It pays a yield of 2.8%, and the consensus analyst price target is up at $104.55.

Microsoft Corp. (NASDAQ: MSFT) was the fourth best-performing Dow stock of 2014 as of Friday. With shares at $39.90, the stock was up 7.5% so far this year. The highest price was $41.66 this year, and the current consensus analysts’ target is $41.31. Microsoft’s dividend yield is also close to 2.8%. The driving force behind Microsoft is not the Nokia deal, but its new leadership under Satya Nadella and its focus on enterprise and the cloud. Fortunately, the death of the PC still remains overstated as well.

Of the four best performers, Microsoft sounds the cheapest at less than 14 times expected 2014 earnings expectations. The current belief is that it will not be until late 2014 or into 2015 before the “new Microsoft” is truly seen under whatever Nadella’s plans are. The bullish and bearish case for Microsoft at the start of year was within the current gains.

ALSO READ: The Next Big Stock Splits After Apple

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.