Why These 3 Dow Stocks Surged This Week

After a slew of earnings reports, the Dow Jones Industrial Average (INDEX: ^DJI  ) gained 1.6% this week.

But three stocks crushed the others:

Company

Weekly Price Change

AT&T (NYSE: T  ) 5.9%
Boeing (NYSE: BA  ) 5.1%
American Express (NYSE: AXP  ) 4.7%

So what's going on with these companies?

AT&T
The cell giant barely grew its subscriber base this quarter and posted earnings of $0.60 per share, slightly above what analysts had expected. But what really had investors excited was that it and Verizon improved their margins by earning more from data plans.

That's important because AT&T's operating margins have fallen from around 17% to 13% over the past several years, and compressing margins is one of the biggest risks facing the major carriers. As Apple (Nasdaq: AAPL  ) iPhones become increasingly popular, the smartphone maker gains more market power over AT&T, Verizon, and Sprint Nextel to provide generous subsidies for its phones. Apple's free cash flow was skewed $10 billion higher than net income over the past year, largely because of the impact of those massive subsidies.

Boeing
Boeing's quarterly earnings rose 58% over the past year, and the company said it's been able to reduce costs by about half for its new, long-awaited 787 Dreamliner planes since it began producing them. Margins and backlogs rose, and Dreamliner production is expected to increase to 10 per month by the end of next year.

American Express
Shares of AmEx soared last week after it posted a 7% earnings on a 12% increase in transactions. The card giants -- Visa, MasterCard, AmEx, and Discover Financial Services -- are hitting 52-week highs, with their businesses firing on all cylinders. Consumers are processing more of their transactions with cards instead of cash, and emerging-market growth is beginning to hit its stride. With 85% of transactions still done in cash, there's still quite a bit of room for growth.

AT&T, Boeing, and AmEx crushed the market this week. If you're looking for some other great blue-chip stock ideas, check out The Motley Fool's "3 American Companies Set to Dominate the World." In this special report, our analysts reveal three tantalizing stocks that are finding growth in emerging economies. You can access the report for for free

Ilan Moscovitz owns shares of Apple. You can follow him on Twitter, where he goes by @TMFDada. The Motley Fool owns shares of MasterCard and Apple. Motley Fool newsletter services have recommended buying shares of Visa and Apple, creating a write covered strangle position in American Express, and creating a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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