Dow Due for Another Good Year, Part 3

Clunkers GM and Hewlett-Packard won't fare much better in 2005, a review of the index's components reveals.
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This week Jim Cramer is taking a look at the individual components of the Dow Jones Industrial Average -- their 2004 performance, and how they're shaping up for the year to come. Today, Part 3, which originally appeared Dec. 29, on RealMoney. (Be sure to read Part 1 and Part 2 of this series.)

General Motors

General Motors

(GM) - Get Report

: This was one of my bigger gaffes. I should have seen the labor costs and the hobbling of the earnings power that comes from the rising short interest rates. Instead, I

predicted $8 in earnings for GM in 2004 and said the stock could trade to $64. Wrong! It looks like earnings of $6.30 are more accurate, and people won't even pay $40 for that. I think GM won't even make $5 in 2005 and that people will pay the same amount then that they pay now for those earnings. Another disappointing year for the big motor maker.

Hewlett-Packard

Hewlett-Packard

(HPQ) - Get Report

: This one truly stunk up the joint in 2004. I expect it to earn no more than $1.52 a share in 2005, even though I said last year at this time that it could earn $1.60 and trade to $32. Wrong on the numbers, wrong on the target. I think Hewlett-Packard's doing better now and can approach my $1.60 a share in earnings in 2005, but I don't know if people will be willing to pay more than $25 for the stock. I wouldn't own it.

Home Depot

Home Depot

(HD) - Get Report

: It will probably exceed my $2 earnings estimate by as much as 25 cents in 2004, but people didn't pay up for it. I thought the stock would go to $40, and it went to $42. I believe that the company could make $2.50 in 2005 and that people will keep loving management and take the stock to $50. Not a bad advance.

Honeywell

Honeywell

(HON) - Get Report

: Could this be Honeywell's year? I predicted $1.60 and $35 this year and we are going to get about $1.68 and $35, so I nailed it. How about $1.85 and $40 for 2005? Not great, but as the wife always says, "Better than a sharp stick in the eye."

IBM

(IBM) - Get Report

: It's doing everything right and people are going to reward IBM with a higher M (that's the magic M-word, multiple) in 2005.

I figured we'd see $5 in earnings and a $100 share price in 2004, and that's pretty much how things are turning out. I bet we'll see $5.70 for 2005 and a $115 share price. Worth betting on for 15%? I think so, and I wish I had some shares in Big Blue.

Intel

Intel

(INTC) - Get Report

: It really disappointed in 2004. I was hoping for $1.35 and a stock that traded to $38, but we will be lucky to get $1.13 and $25. I think Intel could reach $1.25 in earnings in 2005 and that people will pay up to $28-$29 for it, but no more. Therefore, I am looking to unload the stock

from my

Action Alerts PLUS portfolio after the first quarter, which I think will be more robust than analysts realize.

Click here to read part four of this series.

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At the time of publication, Cramer was long Intel.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made.

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