Cramer Bullish on the Dow in '09 -- Part III

This is the third part of Jim Cramer's series of predictions for the Dow components in 2009. Be sure to read the first and second parts.

Cramer's Dow Outlook for 2009 Company Target 2008 Close % Change Dow Point Change GM $2.00 $3.20 -60.00% -9.6 HPQ $44.00 $36.29 17.52% 61.4 HD $26.00 $23.02 11.46% 23.7 INTC $15.00 $14.66 2.27% 2.7 IBM $92.00 $84.16 8.52% 62.4 JNJ $71.00 $59.83 15.73% 89.0 Source: TheStreet.com

General Motors (GM Quote): I believe GM will disappear from the Dow in 2009, a historic change. GM could, like AIG(AIG Quote), become a zombie stock, if the common stock isn't crushed in 2009 by bankruptcy. The GMAC deal is a windfall for the company, though, and a "soldier on" situation could be in the works.

The best hope here is a Citigroup-like(C Quote) investment where the common stock is bolstered, but the union situation makes it highly unlikely that the company's fortunes can turn. This one's problematic for my whole Dow Jones projections because I believe its near or total obliteration will allow the Dow keepers to replace it with something that can rally in 2009. Cost-cutting just won't make it; there is way too much overcapacity in this industry.

Fortunately, given its reduced size, GM's disappearance won't hurt the averages much. If you really like this one, please play the GM Senior Convertible Debentures C (GPM), which is a convertible preferred with a high yield.

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Hewlett-Packard (HPQ Quote): This one's a keeper, as it will be able to grow with its acquisition of EDS, which will provide a way to expand into services, something very important for every hardware company. I also see CEO Mark Hurd cutting costs and beating analysts' bottom-line estimates.

I believe the stock can trade to $44 on cost cuts and expansion through consulting and services. Sure, it needs a strong economy to really power forward, but it can take share from everyone from Dell (DELL Quote) to IBM (IBM Quote), and I believe it will. This is an inexpensive tech growth stock and will be among the best ones to own in 2009. It just needs to weather the potential loss of GM business if GM goes into oblivion, something that crimps the EDS-related earnings power.