Proponents of the “dogs of Dow" theory could enjoy some enviable returns in the new financial year as it looks like some laggards are poised for a positive re-rating over the next few months.

The “dogs of Dow" theory is premised on the belief that stocks move in a cycle and if an investor were to buy the most out-of-favour names on the Dow Jones Industrial Index for the year, these stocks would rebound strongly over the next year.