Boeing and UnitedHealth Are Helping the Dow Wake Up
It's already been quite a week, with a wintry chill slamming into the country and the scientifically proven most depressing day of the year already under our belts. Apparently, a couple companies on the Dow Jones Industrials have taken this as a sign that things can only go up from here; they are surging forward and helping the Dow rouse itself from its early new year slump. Here's why.
Boon for Boeing
Boeing saw solid growth in 2013. Despite facing issues with its Dreamliner 787, the company's stock hit record highs for the year, thanks in part to solid earnings reports and a huge push in production. By the end of the year, the company's stock was up close to 84%. On top of that, Boeing also delivered 648 commercial airplanes in 2013, the most company has ever produced in a single year.
While there's still a ton of 2014 left, the aircraft manufacturer has already seen a bit of growth coming into the new year. The company's stock is up about 2.9% year to date. One potential reason for the bump in price could be positive investor reaction to a recent vote by Boeing's largest union.
On Jan. 3, after a hard-fought battle, 51% of the International Association of Machinists and Aerospace Workers' Seattle branch voted in favor of a contract that calls for housing the assembly of Boeing's new 777X aircraft model in the Seattle area. The union's workers agreed to freeze their pensions at the close of 2016, and also signed on for 10 years of small wage increases, not to mention a $10,000 up-front signing bonus for each worker.
From an investor standpoint, this is great news for Boeing. Besides having access to some of its most experienced and talented workers for its highly anticipated new aircraft, Boeing will also collect up to $9 billion in tax breaks through building the 777X in-state. Having a home base in Seattle for a highly anticipated product sets the stage for Boeing to continue its surge in production, which shareholders would be eager to see. Not a bad way to ring in 2014.
Ringing in a healthy new year
For UnitedHealth , 2013 was also a good year for growth. The country's largest health insurer saw its stock rise 46% from January to December, as enrollment steadily increased and sales broke past the $30 billion mark for each quarter.
UnitedHealth got an early year shot in the arm on Tuesday, when Deutsche Bank changed its ratings outlook from hold to buy. Since then, the company's stock is up more than 2% year to date.
What's the reason behind the sudden change in opinion? According to Deutsche Bank analyst Scott Fidel, even though UnitedHealth performed well in 2013 -- its stock had risen 44% by the end of the year -- the company actually underperformed that year compared to many of its large-cap peers in the health industry.
There's evidence that 2014 will be better. Fidel believes that, based on a 2014 employer health benefit survey, UnitedHealth is poised to push through price increases above the market's standard. That, in turn, would offset what he calls the company's "below-average rate increases in 2013." In the meantime, the market is more than willing to take this news and run with it.
Nothing chilly about these stocks
While it's normal for the stock market to go into hibernation mode once in a while, neither Boeing nor UnitedHealth plans to start this year lying down. Not only is their good news helpful for a short-term stock boost, it also suggests that things will be solid for both companies for some time to come, which will prove additionally helpful for the Dow as 2014 progresses.
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The article Boeing and UnitedHealth Are Helping the Dow Wake Up originally appeared on Fool.com.
Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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