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It has been a crazy 2013 so far. The S&P 500 (GSPC) just closed north of 1,500 for the first time in 5 years after eight consecutive days of gains; the Dow (DJI) is getting closer and closer to its all-time high of 14,164.53 and is following a strong bullish trend, while the VIX, or the "fear index" is depressed near record lows (Below).

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This is also the best start of the year for the Dow since 1987 (based on the first 17 trading days of the year), making the investing even more attractive. I picked my three favorite Dow stocks that showed solid earnings and have yet to please and presented them below. They are trading at the average forward P/E of 11.87 and look cheap when considering Dow's average P/E ratio of 15.38, providing a good investment opportunity.

General Electric (GE) failed to disappoint its shareholders by reporting impressive quarter earnings, driving up the stock to $22.29, as of Jan 25. The operating EPS grew by 13% to $0.44, one cent higher than what Wall Street had expected. The industrial heavyweight saw stabilization in US demand, sluggish recovery in Europe, but strength in emerging markets and especially China, which led to topped expectations. The company is said to focus mostly in underdeveloped countries, where they see real potential for the near future. And indeed, investment and future growth do not appear to be a significant issue for the industrial conglomerate, which increased its spare cash by 48% this year to $17.8 billion. The company recently secured a $394 million contract with Renova Energia, Brazil, to build wind turbines, $1.1 billion contract with Petrobras, Brazil, deliver subsea wellhead systems and another, $500 million contract with Petrobras to supply turbomachinery equipment. In addition to that, GE decided to diversify their aviation products portfolio and purchased the Italian Avio S.p.A. for $4.3 billion.

General Electric is currently trading at forward PE of 12, slightly below the average for the DJI. The current dividend yield is 3.40%, and it will be further increased by 12%, the company announced in December. General Electric consistently delivered strong earnings, and I believe it provides a good investment for the long haul.

Disney (DIS) has been performing pretty well for the last few months. The stock is up slightly more than 5% for the year, and I believe it will continue growing throughout 2013 and beyond. In late 2012, the company ended the final stage of acquiring Lucasfilm - the company best known for the Star Wars and Indiana Jones franchises. This is their third big acquisition after Pixar in 2006 and Marvel Entertainment in 2009. The management plans to justify the cost of $4 billion by incorporating the famous action figures from Star Wars and Indiana Jones in their amusement parks and appeal to the large fan base - just what they did after acquiring Pixar and Marvel. Another sweet deal Disney recently secured is with Netflix (NFLX). The internet streaming giant is expected to pay about 300 million a year in exchange of having the rights to stream their movies. However, this might appeal to the long-term investors, as the contract will begin as late as 2016. Until then, Disney is locked in another very profitable contract with Starz. The stock is currently trading at a forward P/E of 13.6 and yields 1.4%.

Alcoa (AA) is another company that recently reported impressive quarter earnings, beating expectations on revenues and meeting expectations on earnings per share. In Q4, the aluminum producer made $5.9 billion in revenues and the earnings per share came in at $0.06. The company was badly injured in the past because of the weak aluminum demand, but it looks like it is finally picking up, as the economy slowly improves. According to the earnings report, 7% demand growth is expected in 2013 for two main reasons - the automobile industry is becoming a lot more aluminum-dependent and second, the recent spike in copper prices had led more industries to start using this metal; moreover, because of the recent cutbacks from other companies in the market, there will be a deficit of the metal. Just like General Electric, Alcoa is seeing much growth potential in developing economies, and China and India in particular; those countries are expected to lead consumption by double-digit growth in 2013. As of Jan 25, Alcoa is standing at $9.03 a share, with a forward P/E of 10 and yields 1.30% in favor of its shareholders.

Source: My Top Dow Picks