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Laggards, Losers and Dogs: Dredging the 2013 Dow for Value

NEW YORK (TheStreet) -- I don't typically spend a great deal of time analyzing the mega-caps -- the largest and most well-known stocks -- primarily because these are well picked over by the dozens of analysts covering them. New information is simply difficult to uncover with so much focus on these companies, so I'd rather spend much of my research time on small, underfollowed and unloved stocks. However, I did find something interesting recently in a brief review of the stocks comprising the Dow Jones Industrial Average (^DJI).

The DJIA has had a solid year, and the index is up 21% year to date. While some DJIA components, such as Boeing (BA), are up 80% year to date, it's the bottom ten performers that really interest me. These have all had below-benchmark performance this year. In fact, the average return of these companies has been a gain of about 5.5% (not including dividends), or about 8.75% on a total return basis. That's well under benchmark.

Call them the laggards, even the losers of the Dow, if you like. Don't confuse the laggards with the "Dogs of the Dow," the ten highest yielding Dow components at year end, although there will no doubt be some overlap: loser dogs. The naming of the Dogs of the Dow has become an annual event, and the investment results the following year for the Dogs have been compelling over the years. In fact there are ETFs devoted to the concept.

The laggards represent a slightly different spin.

There are just two Dow components that are in negative territory year to date, Caterpillar (CAT) and IBM (IBM). Oil is well represented in the laggards, as both Exxon Mobil (XOM) and Chevron (CVX) made the list. So did consumer oriented names Coca Cola (KO), McDonald's (MCD) and Wal-Mart (WMT). Rounding out the list are Cisco (CSCO), Verizon (VZ) and AT&T (T).

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