Back to Bullish on the Dow for 2009 -- Part I

I am feeling even more optimistic about this stock after Steve Mnuchin, a bright guy I have followed for years, decided, with some other smart fellas, to buy Indymac, a terrible lender. I also like the California market after visiting the hardest-hit area, the Palm Springs part of the Inland Empire, in November, and finding very little for sale. That was when rates were at 6%, albeit with the average home falling about 40%. The rates, the price cuts, the lack of new building, will mean that California is back. And with it will be this stock. I also believe that China will rally hard and that Bank of America will be able to make a lot of money with the TARP money it invested there, although that was a pretty darned outrageous bet.

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Boeing(BA): Other than General Motors, this is the stock I am most concerned about in the Dow Jones average, even more than Alcoa. I know the company just raised its dividend by 5%, but I believe that was a major mistake, and the company should have preserved cash. It would not surprise me if Boeing didn't have to cut the darned thing next year because of its labor problems and order cancellations -- let alone problems building its new planes.

However, the recent decline in oil has given the airlines new life, and with that, the possibility of a level of solvency that will give this company a second wind in the second half of the year. I believe it will give up its early gains in the year and trade back to lows where it will be a buy up to $42 by year-end. Estimates are way too high, so I would sell it into this rally and pick it up lower later in the year.

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Citigroup (C): The government's plan to bolster Citigroup's capital should work, and I find it the best of the TARP investments because it gives investors some upside along with the government. Citigroup didn't get killed like the other major investments, as this could easily have been an AIG (AIG) if the government wanted it to be, if not a Lehman, although the feds figured out that Lehman was not such a great idea, literally a few hours after it said a rescue wasn't possible. Of course, we know anything is possible.

Under CEO Vikram Pandit, who still has not been there a year, the company has shrunk the balance sheet dramatically, and it will continue to do so. I believe that there are a ton of asset sales ahead. But it has a huge exposure to the consumer. It can rally to where the government's warrants kick in. I see it going to $9 but not much further, unless head count shrinks to 300,000 from 360,000 and the credit markets start a bit of a revival. Again, percentage-wise, that makes the stock a buy, but not as much as one for JPMorgan Chase.

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Cramer's Dow Outlook for 2009 Company Target 2008 Close % Change Dow Point Change AA $15.00 $11.26 24.93% 29.8 AXP $22.00 $18.55 15.68% 27.5 T $35.00 $28.50 18.57% 51.8 BAC $18.00 $14.08 21.78% 31.2 BA $42.00 $42.67 -1.60% -5.3 C $9.00 $6.71 25.44% 18.2 Source: TheStreet.com

At the time of publication, Cramer was long JPMorgan Chase, Freeport-McMoRan and the iShares FTSE/Xinua ETF.

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Be sure to check back all week for the rest of Jim Cramer's 2009 predictions for the Dow components.

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