Can BAC Double Two Years in a Row?

Bank of America was up 108% last year to lead all members of the Dow.  Amazingly, one can argue that even after the 100% return, BAC is still cheap though.  The stock trades at a little over 0.5x book value, which is a steep discount to its peers.  Although fundamentals say that a double is not an absurd idea, would a back to back doubling have precedent?

At least in the last 13 years, the follow up performance of the previous year’s best Dow stock (the “Champ” of the Dow) has not been good.  Since 1999 the defending Champ has been negative 10 out of 13 times in the following year.  Six of those times the Champ has been down by double digits and the average performance is -9.58%.  Below is the performance of the past Champs in the year that they won the title and the year they tried to defend it.  BAC shareholders beware.

Performance of Best Dow Stock in Following Year

2011 Dogs of The Dow Performance in 2012

With the year winding down and Bank of America up nearly 100% for the year on today’s move, I thought it might be a good time to revisit how all of last year’s Dogs of the Dow have done in 2012.  Thanks to Bank of America’s huge gain the 10 worst performing stocks of 2011 have averaged a 10.5% return in 2012, 2.2% better than the rest of the Dow.  However, if you strip out BAC’s gain the performance is less than stellar.  On average the other 9 stocks have returned only 1.3% this year.

Dogs of the Dow Performance 2012