The Dow Jones Industrial Average (INDEXDJX:.DJI) has been on a tear this year. The blue-chip index has risen more than 10% in 2013, rewarding investors with spectacular gains as the economy continues to rise from the depths of the recession. However, several of the Dow’s stocks have eclipsed the index’s gains, leading the market’s rise to new highs. Should you buy the gains made by the Dow Jones Industrial Average (INDEXDJX:.DJI)’s three best stocks in 2013, or are these highfliers ready for a tumble?
Pfizer Inc. (NYSE:PFE) has roared up the charts this year, gaining more than 18% year to date. The company has managed to beat back fears over declining revenue stemming from patent expirations on top drugs, such as cholesterol-fighting Lipitor. The company kicked off its 2013 run a little early when blood-thinning therapy Eliquis won FDA approval in the final days of 2012; since then, Pfizer Inc. (NYSE:PFE) has won expanded FDA approval for a new indication for vaccine Prevnar 13 and Japanese regulatory approval for arthritis medication Xeljanz.
Are these victories enough to justify the stock’s gains? Pfizer Inc. (NYSE:PFE) has proven so far that it won’t let the patent cliff threaten its future. Between its smart management decisions — such as spinning off former animal-health business — and its massive, promising pipeline, this company is well-positioned for the future. Growth investors received an added boost recently when the FDA labeled Pfizer Inc. (NYSE:PFE)‘s developmental breast-cancer therapy palbociclib as a breakthrough therapy, setting the drug up for a speedier approval process. With palbociclib estimated by some analysts to reach peak annual sales of $5 billion, Pfizer Inc. (NYSE:PFE)‘s future sales won’t be brought low by Lipitor’s losses. This is one gainer you can trust.
The same can’t be said for the Dow Jones Industrial Average (INDEXDJX:.DJI)’s leading gainer of 2013, however. Hewlett-Packard Company (NYSE:HPQ) has surged far ahead of the crowd this year, with shares up 39% year to date. Investors have bought into this company’s turnaround story, happily reaping the rewards as Hewlett-Packard Company (NYSE:HPQ) has embraced a new, diversified future, introducing products such as the Moonshot server in order to reduce its dependency on the PC market.
Hewlett-Packard Company (NYSE:HPQ) is still tied to the PC industry, however, and this market’s fall has been the company’s bane. PC sales cratered by 14% in the first quarter of 2013, according to research firm IDC, and the market’s collapse won’t help Hewlett-Packard Company (NYSE:HPQ) turn its lagging business around any faster. Until Hewlett-Packard Company (NYSE:HPQ) manages to significantly decrease its reliance on PC-related sales and establish a major presence in more promising markets, this stock is a risky play at best. Investors looking for strong, steady blue-chip stocks shouldn’t trust HP’s surprising surge. This is still a company in trouble.
The article Are 2013’s Best Dow Stocks Buys? originally appeared on Fool.com is written by Dan Carroll.
Fool contributor Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Walt Disney (NYSE:DIS). The Motley Fool owns shares of Walt Disney.
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