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The Dow's Top 3 Stocks This Week

By Travis Hoium - Apr 6, 2013 at 1:00PM

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UnitedHealth, AT&T, and Merck bucked the declines on the Dow.

If you'd only read the headlines, you'd think it was a rough week on Wall Street. Employment numbers were terrible and the housing market may be slowing a bit, but stocks moved sideways once again. The Dow Jones Industrial Average (^DJI 0.03%) fell just 0.09% this week, and the S&P 500 (^GSPC 0.01%) lost only 1%. Despite the declines overall, there were a few big winners on the Dow this week.

UnitedHealth Group (UNH 1.50%) jumped 8.5%, boosted by a surprise increase in Medicare Advantage reimbursements. The government initially proposed a 2.2% cut in rates, but after much lobbying from the industry, it did a 180 and decided to increase reimbursements by 3.3%. Across the board, insurers loved the news, and UnitedHealth won't be under the same margin pressure some had feared in 2014.

AT&T (T 0.94%) was second on the Dow, climbing 3.6% for the week. Investors cheered when Facebook announced that the first Facebook Home-specific device, made by HTC, will be exclusive to AT&T. The pop on Thursday was probably overdone, though, because Home will be available on most Android phones and there doesn't appear to be any long-term advantage for AT&T with Home. Friday was also the last day to own AT&T before getting a $0.45-per-share dividend, so that may have boosted the stock slightly late in the week.

Merck (MRK 1.58%) rounds out the top three this week, climbing 2.1%. Aside from a lawsuit against India's Glenmark Pharmaceuticals over the potential infringement on two diabetes drugs, it was a fairly quiet week for Merck. The company got a bit of a boost when the Medicare Advantage reimbursement news came out, probably because investors are hoping margins won't be squeezed further down the medical value chain. If insurers are generating less revenue, they'll push for lower prices from pharmaceutical companies, so the higher rates may be an incremental positive for the company. Investors are also looking forward to earnings, which Merck will release on May 1.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,261.90 (0.03%) $8.77
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$3,901.36 (0.01%) $0.57
AT&T Inc. Stock Quote
AT&T Inc.
T
$20.40 (0.94%) $0.19
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$93.55 (1.58%) $1.46
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$485.73 (1.50%) $7.18

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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