Nike and UnitedHealth Lead Dow to Healthy Gains

Up and down and around we go. That's what it feels like watching the Dow Jones Industrial Average (DJINDICES: ^DJI  ) over the past two weeks as investors closely follow budget negotiations in Washington. The market brushed off the shutdown early last week but became more concerned as the gridlock wore on, hitting a recent low yesterday before recovering. Today, the market recovery continues as Washington hammers out potential solutions to the budget and debt ceiling, causing the Dow Jones Industrial Average to rise 2%.

We don't know if there will be a deal soon, so until something is signed, sealed, and delivered, I don't think the volatility is over. For long-term investors that doesn't matter, because volatility is just noise to our investments, but traders have to be pulling their hair out trying to figure out what the market is going to do next.

We can't control what's going on in Washington, but investors can make sure their money is with companies making the right decisions for the long term. One company that appears to be moving in the right direction is Nike (NYSE: NKE  ) , which is up 3% after announcing its long-term growth plan. Nike said it expects to hit the high end of its fiscal 2015 revenue goal of $30 billion and is targeting $36 billion in revenue for fiscal 2017.  

During fiscal 2013, which ended on May 31, Nike generated $25.3 billion in revenue. Management expects a compound growth rate of about 9.2% between 2013 and 2017 to hit the new target. That's a very strong growth rate for a company the size of Nike and shows just what a consumer stalwart the company is. Nike stock isn't cheap at 25 times earnings, but good companies are often worth the premium. 

UnitedHealth (NYSE: UNH  ) is the other big gainer, jumping 3.2% today. Executives from UnitedHealth and several other insurers are speaking today at the Forbes Healthcare Summit 2013, where one topic is moving toward accountable care instead of fee-for-service in medicine. The model for insurers, hospitals, and doctors has long been to pay for services offered, which encourages more care but not necessarily the best or most cost-effective care.

The change UnitedHealth and others are discussing is moving to bundled payments to doctors, hospitals, and accountable care organizations, which would be compensated for keeping people healthy, not just for how much care they offer.

This would be a fundamental shift for the industry, and UnitedHealth is putting its weight into being a leader. It hopes to increase contracts that reward quality and cost efficiency from $25 billion to $50 billion annually. Time will tell if this is the right move for the company, but I'd rather see an insurer like UnitedHealth leading the way instead of trying to catch up in a few years.

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