What a difference one quarter can make. Last year, these stocks were at or near the bottom of the heap of the Dow Jones Industrial Average. Fast-forward three months and the landscape has changed completely. Here is a look at the current alpha dogs of the Dow and how they have managed to reverse their fortunes.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

Bank Run
So far this year, Bank of America (NYSE:BAC) has been the lead dog of the Dow with its year-to-date return around 73%. Considering the 60.82% loss that the stock posted last year, it has been quite the turnaround story in the first quarter.

The company has continued to shore up its balance sheet with increased liquidity and lower debt levels. Bank of America has also seen a healthy increase in assets under management and associated asset management fees over the course of the past year. If the bank can maintain its revenue momentum, this stock may still have room to run.

Another Dow component that has torn the cover off the ball in 2012 has been JPMorgan Chase & Co. (NYSE:JPM). The stock has jumped roughly 38% since the beginning of the year. In 2011, shares of JPMorgan experienced a 23.70% haircut. The company is operating in a tough environment but is still enjoying some positive trends such as a decline in its net charge-off rate. For more information, see: Analyzing A Bank's Financial Statements.

Windows of Opportunity
Shareholders of Microsoft (Nasdaq:MSFT) had to be wondering when the stock was going to breakthrough after years of stagnation. Last year's drop of 7.22% did little to instill confidence that the tide was about to turn. Amazingly enough, the stock is up around 25% this year.

It has recently been speculated that Microsoft is working with Nokia (NYSE:NOK) to develop a 10-inch tablet which will feature Windows 8. "DigiTimes" has noted that its sources expect such a tablet to hit the market no sooner than the fourth quarter. In the meantime, the company will be looking to boost its position in the Chinese smartphone market as its efforts in the United States have yet to make their mark.

One other Dow stock that has taken the market by storm in the early months this year is Caterpillar (NYSE:CAT). The construction equipment maker has seen its stock surge over 19% since the beginning of the year. The company has been the beneficiary of a resilient demand for its products from overseas markets. For more information, see: Overseas Investing No Protection Against Downturn.

The Bottom Line
The stock market rally that has led most equities higher this year has had an especially profound impact on last year's cellar dwellers in the Dow. Several of them have checked in with outsized gains that have surprised even the staunchest supporters of these companies. The returns from the alpha dogs of the Dow will likely be harder to come by as the year rolls on, but they are off to an impressive start.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Billy Fisher did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Investing News

    What You Can Learn from Carl Icahn's Mistakes

    Carl Icahn has been a stellar performer in the investment world for decades, but following his lead these days could be dangerous.
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Stock Analysis

    Tech Stocks Vs. Financial Stocks in 2016

    Consider the arguments for allocating more of your investment portfolio to either the technology sector or the financial sector for 2016.
  7. Stock Analysis

    The Top 5 Financial Penny Stocks for 2016 (CPSS, ASRV)

    Learn about some of the most promising penny stocks in the financial services sector that investors can consider adding to their portfolio for 2016.
  8. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  9. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  10. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
RELATED FAQS
  1. How can insurance companies find out about DUIs and DWIs?

    An insurance company can find out about driving under the influence (DUI) or driving while intoxicated (DWI) charges against ... Read Full Answer >>
  2. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  3. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  4. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center