3 Stocks That Could Push The Dow Jones Higher

Includes: CSCO, INTC, UNH
by: Dave Dierking

Earlier this month, the Dow Jones Industrial Average (Private:DJI) finally eclipsed its previous all-time high set over five years ago. While on a surface level it might seem like good times are here again the foundation for such a lofty Dow level is not without its cracks.

The unemployment rate is still well north of 7% and the number of people who consider themselves underemployed or who have given up looking for work altogether would likely push the number even higher. Corporations are reporting record profits but many of those numbers are being supported more by accounting and cost cutting rather than genuine organic growth and improved financial strength.

It begs the question - are we nearing a temporary market peak and we're poised for a correction or is there further room for the broader market to continue pushing higher?

Considering the fact that the Fed is still supporting the economy to the tune of around $85 billion a month through the purchase of various Treasury and mortgage-backed securities combined with the continuing uncertainty involving the Eurozone, you could make the argument that there is limited upside to the market at this point. However, there are a few Dow stocks that still present compelling value propositions that could provide the fuel for the index to continue moving higher.

Each of the following three stocks not only presents a persuasive argument for investing based solely on the financial data but also has some encouraging business prospects that could ultimately push its stock price higher.

Intel (INTC)

The semiconductor giant stands to benefit from improved conditions in the markets for both chips and personal computers both domestically and in emerging markets. Additionally, if a Digitimes story is to be believed, Intel may be in a position to land 10% of Apple's (AAPL) A7 processor orders as the iPhone maker begins expanding the list of companies that it orders components from.

Intel stock has largely been left out of the recent rally as its price has languished in the mid 20s for most of the last two years. The recent financials though are noteworthy.

Intel carries a P/E ratio of just 10 (comparing favorably to the Dow's current P/E ratio of around 13) and sports a juicy 4.2% dividend yield. The company is projected to grow earnings at 12% per year over the next five years and it's sitting on a cash position of over $18 billion.

If all this happens, we could see Intel's stock price begin making a move back towards $30 - a level it hasn't closed above in over eight years.

Cisco (CSCO)

Cisco continues to operate in a tough economic environment but will benefit from an economic recovery that should see increased spending in network infrastructure and cloud computing.

The company should also continue to profit from sustained data services demand as well as improved network systems demand in Asia.

While the stock price has bobbed around since its major run-up in the 1990s, it could be poised to rebound. Earnings and revenue growth estimates remain strong while the stock price looks to be slightly undervalued compared to its technology peers.

Throw in a 2.6% dividend yield and Cisco could be in a position to deliver solid shareholder value.

UnitedHealth Care (UNH)

UnitedHealth could end up being one of the biggest beneficiaries of Obamacare as millions of Americans are going to require health coverage. Even bigger for them could be their move into Latin America as their entry into the Brazilian health insurance market should provide a significant opportunity for growth.

The stock price looks downright cheap at current valuations - it carries a current P/E ratio of just 10 on growth estimates of 11% per year - but looks even better when compared to fellow health care titan and Dow component Merck (MRK). Merck carries a P/E of around 22 with annual expected growth at only 4%.

If the 2013 stock market rally can be continued, it's going to require the participation of some of the companies that have either been left behind or look to have effectively set themselves up for additional growth. Intel, Cisco and UnitedHealth could legitimately fall into both categories and all could have the legs to help Dow extend its recent run.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.