Please ensure Javascript is enabled for purposes of website accessibility

These 2 Unlikely Stocks Sent the Dow Higher

By Dan Caplinger - Apr 22, 2013 at 8:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A mixed earnings report and an activist investor's buy sent these Dow stocks upward.

Given the market's dour mood early on, that the Dow Jones Industrials (^DJI 0.00%) managed to eke out any gain at all is surprising. With concerns about earnings reports and a downbeat report from the housing sector, the Dow quickly lost 90 points. But as the day went on, it once again demonstrated its ability to bounce back from adversity.

What's even more surprising are the stocks that got it there. Microsoft (MSFT 1.07%) has been a highly unpopular stock for years, as the software giant has largely missed out on the massive run that more progressive technology companies have seen in their stocks over the past decade. But after a modest run-up to begin 2013, Microsoft's stock soared 3.6% today on news that activist investor ValueAct Capital had reported a $2 billion stake in the company. At this point, the move seems overblown, given that the position amounts to less than 1% of Microsoft's outstanding stock. But as a signal that investors may finally demand value-enhancing changes from the company, Microsoft should take the situation seriously.

The other surprise gainer was Caterpillar (CAT -0.26%), which some blamed for the Dow's initial drop after announcing disappointing earnings and guidance. Yet, by the end of the day, investors seemed to focus on the company's more upbeat statement of confidence and optimism about what it called the "relative stability" in the economies of the U.S. and China so far this year. That's hardly a glowing recommendation, given Caterpillar's guidance cut for 2013 earnings, but with the stock already having gotten beaten down, relieved investors bid shares up 2.8%.

Finally, outside the Dow, Power-One (NASDAQ: PWER) soared 57% after ABB (ABB -0.45%) made a $1 billion bid for the solar industry player. The ABB bid values Power-One at $6.35 per share, and the stock climbed to within just a couple of cents of that figure as investors take the acceptance of the deal as a foregone conclusion. Consolidation within the solar industry has been inevitable, and with Power-One's position in the solar inverter market, ABB hopes to bolster its sales by making Power-One's equipment available to the more than 100 countries in which ABB operates.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$30,775.43 (0.00%) $0.00
Caterpillar Inc. Stock Quote
Caterpillar Inc.
$178.29 (-0.26%) $0.47
Microsoft Corporation Stock Quote
Microsoft Corporation
$259.58 (1.07%) $2.75
ABB Stock Quote
$26.61 (-0.45%) $0.12

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.