NEW YORK ( TheStreet) -- People do a lot of top down analysis at this time of the year, trying to figure out how much the Dow and the S&P could go up--or down--in the coming year. That's not my style. As someone who is a stock picker, I like a bottoms up approach, analyzing each Dow component to come up with what I think the most visible index will deliver in 2011.

Here's my annual analysis, case by case, that adds up to a target of 13,365 for the Dow Jones next year -- a 16% gain from current levels and a bountiful return -- based on a prognostication of the performance of the individual members of the venerable index.

Although I am a bottoms up guy, as a backdrop I am presuming a resumption of decent U.S. growth courtesy of the Fed -- call it 3% to 4% -- continued worldwide growth, a stable to slight decline in the dollar and a decent rise in rates (30-year Treasury bond going to 4.8%) as befitting a return to economic health.

Still, I don't want to overplay the macro hand. I am seeing these terrific gains on the Dow from the players within, not the trends outside. Here's how I get to my 13,365 target.

1. Alcoa ( AA): Let's start off with a bang. With just a $14 billion market cap -- and being the leading independent producer of a metal that will be in intense demand in 2011 because of boosted aerospace, autos and power plant production -- Alcoa will be hard-pressed to stay independent. Earnings have been depressed throughout the downturn, but the cash flow has picked up, courtesy the excellent stewardship of CEO Klaus Kleinfeld. If the company stands alone its stock can advance and get a 12 multiple, a slight discount to many of the cyclical stocks in the average, and that would put it at $18. But I think it gets bought out at $22, a fabulous return and perhaps my favorite in the whole average.

2. American Express ( AXP) just doesn't get the rewards it deserves in this market with people constantly trying to lump it in with slow growth banks or Visa ( V) and MasterCard ( MA) which have been whacked by the Fed because of debit fees. American Express is a credit card company with fewer and fewer defaults and excellent growth, especially with the rebounding world economy, and it should be treated as such. I see the company earning $4 next year and deserving a 15 multiple, more in keeping with double-digit growth companies. Call it $60.

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