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Editor's note: This is Part 1 of Jim Cramer's review of the prospects for the stocks that make up the Dow 30. Be sure to read Part 2 and Part 3 and Part 4.

I guess I am bullish.

That's what happens if you review the

Dow Jones Industrial Average

, the Dow 30, from the bottom up. That's what happens if you calculate each stock's earnings and then solve the equation, multiple times earnings equals share price, for those who haven't read

Jim Cramer's Real Money: Sane Investing in an Insane World

.

12,470.

That's what my Dow stock-target prices add up to. Now, I know that may not happen all at once. I also know that the

General Motors

(GM) - Get General Motors Company Report

wild card, plus the gremlins who take care of the Dow, always play havoc with my predictions, which I make

each year.

Still, that's a nice gain from where we are now. I believe it is doable, especially when you consider that the U.S. stock market really needs to play catch-up to the rest of the world, which really ran rings around us in 2005.

When I calculated the increase, at first I blanched. "No, I am not

that

TheStreet Recommends

bullish," I said to myself. But I can't fudge. I calculated each stock's gain, and added them all up, and I get 12,470.

So be it.

This is how I got there:

3M
Look for $90 at year-end

3M

(MMM) - Get 3M Company Report

: Here's a stock that already has had a run simply because it picked a CEO, which is more than it had before. I was beside myself with glee when James McNerney left 3M because he went to

Boeing

(BA) - Get Boeing Company Report

, which I own for

Action Alerts PLUS. The new fellow, George Buckley, frankly, is a bit of a question mark. Buckley did a great job at

Brunswick

(BC) - Get Brunswick Corporation Report

, which historically had been very poorly run. The problem is that McNerney left at all, and I don't know why he did. 3M's a great but intransigent company, hard to get your arms around and hard to learn, so I believe that Buckley's got a real transition year ahead of him. That said, raw costs have peaked, so I am not worried about the numbers, just the innovation and add-on growth. I believe the company could make as much as $5 next year, but don't know if it deserves a 20 multiple on that. Let's put it at $90 at year-end 2006.

Alcoa
Lucky to flatline in '06

Alcoa

(AA) - Get Alcoa Corporation Report

: I have no confidence, zero, zed, that Alcoa can make its $1.90 next year. I believe that $1.70 will be more like it, and darned if I'm going to give this stock more than a 15 multiple on that number. That's right, I believe this stock will be lucky to flat-line in 2006. It is poorly managed, not rationalized and facing a glut of aluminum from overseas. What

should

have happened to Alcoa? It should have moved on to titanium, or ceramics or carbon fibers. Aluminum is simply not that useful anymore. Ouch! But this stock will be at $26 next year at this time. What's truly sad is that in the final year of the economic expansion, when the

Federal Reserve

was raising rates furiously and curiously as it did in 2005, Alcoa should have exploded upward. Wrong!

Altria
Steaming into 2006

Altria

(MO) - Get Altria Group Inc Report

: There will be no Altria next year at this time, just Philip Morris International, Philip Morris Domestic and

Kraft

( KFT). I don't know what the keepers of the Dow will do with that split-up; they'll probably use it, moronically, to add still one more pharma or telecom name, which they seem to be addicted to -- and which is why the Dow has become so unrepresentative of late.

BellSouth

( BLS) anyone?

Wyeth

( WYE)?

Altria comes into 2006 steaming hot, with prices going up and China embracing Marlboro. I have to tell you that Kraft, if anyone would pay attention to it, could be worth a lot more, but if you spend every waking hour being deposed and under litigation, you don't think much about cream cheese. I believe the parts of this company are worth north of $105 and that they will be the best-performing stocks in the Dow next year. Which, of course, is why I own Altria for

Action Alerts PLUS and wish it would come down so I could buy more. I don't really care about the earnings estimates here, by the way, because it is a total sum-of-the-parts situation.

American Express
Could gain 8-9 points

American Express

(AXP) - Get American Express Company Report

: With $3 in earnings power and easy comparisons because of gasoline, Hurricane Katrina and Hurricane Rita, this stock should motor to $60 rather early in the year. Underneath the steady businesses is turmoil, though, as the company tries to deal with the dismantling of that Advisers business and as it searches for new growth. I still believe that there could be a takeover here, and that

Citigroup

(C) - Get Citigroup Inc. Report

wants the property. But on earnings alone, I see the thing up 8-9 points. Travel can't be as bad as it was in 2005, it just can't be.

AIG
With fires out, it burns higher

AIG

(AIG) - Get American International Group, Inc. Report

: Martin Sullivan turns out to be good, and as much as I believe that Hank Greenberg was a charitable guy, the stuff that went on in his name is just downright creepy. He obviously overstayed his welcome, and continues to do so. Oh, and by the way, doesn't it seem that all the miscreants have decided to come on television and trash New York Attorney General Eliot Spitzer, even as they, not Spitzer, were evil-doers? (In the interest of full disclosure, Spitzer was an investor at Cramer Berkowitz, the hedge fund I founded.) With rates up dramatically, and honest accounting now in store for AIG, I believe estimates are way too low and this company could earn $6. Give it a 15 multiple and you have a $90 stock. You know something? I may just buy this stock in a couple of weeks because rates are up gigantically and this business, year over year, could be

en fuego

. Good riddance, Hank!

AT&T
Might as well be a bond

AT&T

(T) - Get AT&T Inc. Report

: Nope, doesn't have it. One of the things I pride myself on is how darned right I have been about how bad these telcos are. AT&T will stretch to make its $1.80; it will do it all the wrong ways; it will be unimpressive; and it will be given no due this year, just as in 2005. This stock might as well be a bond. If I were this company's management, I would slash the dividend and build out the infrastructure to make it so you can wirelessly send video into homes. But they won't do that. There's nothing here, I am afraid, and I see only $25 next year, too.

Boeing
Second-favorite of the bunch

Boeing

(BA) - Get Boeing Company Report

: Numbers are

way

too low here, the $3.30 estimate will be blown away, and I believe that $3.60 could be more like it, or maybe even $4 if the orders come through. I will pay easily $90 for that, because this company is the single-biggest beneficiary of the need to have low fuel costs for airlines. The renaissance of the airline business worldwide and the domestic strength in the group make the stock my second-favorite for the year after Altria. People, please understand that aerospace is in a multiyear cycle and you can't let your mind be constrained by how high the current multiple is.

Editor's note: Be sure to read Part 2 and Part 3 and Part 4.

I guess I am bullish.

At the time of publication, Cramer was long Altria and Boeing.

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. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for

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