Categories: Alpha Algorithm HotlinesStock Market News

A Six-Strategy Bet on Health Care and Booking 38.9% Option Gains

This week’s Alpha Algorithm has identified a new sector, healthcare, that has attracted the attention of the top alpha-generating investment strategies: UnitedHealth Group Incorporated (UNH).

Founded in 1974 and based in Minnetonka, Minnesota, UnitedHealth Group Incorporated offers consumer-oriented health benefit plans and services for a wide range of customers. It also provides Medicaid plans, health care programs and health services through a network of one million physicians and other health care professionals at approximately 6,000 hospitals and other facilities.

United Healthcare versus the S&P 500 Year to Date

Six Top Investment Strategies Betting on UnitedHealth Group Incorporated (UNH)

1. Fundamental Strength

A top U.S. stock based on fundamentals measured by book value, cash flow and sales dividends.

2. Insider and Analyst Sentiment

One of 100 top stocks out of 5,000 U.S stocks where corporate insiders (a director or senior officer of a company, or any person or entity that owns more than 10% of the company’s stock) are buying the stock and Wall Street analysts have recently increased earnings estimates.

3. Large Cap Growth

The stock is among the top 50 large-capitalization U.S. growth stocks generated through a rigorous 10-factor fundamental screening process.

4. Momentum Factor

The stock also is one of the top 120 large- and mid-cap U.S. stocks exhibiting relatively higher price momentum, as measured by a specific factor which has historically driven a significant part of companies’ risk and return.

5. Small-Cap/Value Tilt

Selected using a multi-factor modeling approach, the stock is a smaller-cap or value investment designed to enhance portfolio risk/return characteristics.

6. Broker’s Best

One of Raymond James’ selection of stocks expected to outperform the S&P 500 over either a six- or 12-month period.

Recommendation

Buy UnitedHealth Group Incorporated (UNH) at market today.

Place your initial stop at $128.00.

Options

With the stock currently overbought, I am holding off on recommending any options in this position for now.

Portfolio Update

Both AT&T, Inc. (T) and Johnson & Johnson (JNJ) now boast double-digit percentage gains of 11.28% and 11.49%, respectively.

Raise your stop in AT&T to $42.61 and Johnson & Johnson to $121.00 to lock in at least a 10% gain in these stocks.

Sell your remaining LOW July $75 calls (LOW160715C00075000) that last traded at $5.07 for a 38.9% gain.

Sincerely,

Nicholas A. Vardy

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world. He was the Editor of The Global Guru, a free weekly e-newsletter, and also edited the trading services Momentum Trader Alert, which focused on making short-term profits in the hottest markets in the world, and The Alpha Algorithm, which was designed specifically to deliver big, fast triple-digit winners, month after month. He was also the editor of Smart Money Masters, a monthly service focused on longer term investments recommended by the brightest minds in the business. Mr. Vardy has been a regular commentator on CNN International and the Fox Business Network. He has also published articles in The New Republic, The World and I, and The Baker & McKenzie Legal Review. The Global Guru/Nicholas Vardy has been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo! Finance, and MSN Money Central. Mr. Vardy graduated from Stanford with a B.A. — with honors and distinction — in both Economics and History, and he also earned an M.A in Modern European Intellectual History. After winning a Fulbright Scholarship, he earned a J.D. degree at Harvard Law School where he was an editor of the Harvard International Law Journal. When not uncovering investment opportunities for his subscribers and investors, Mr. Vardy is a keep-fit enthusiast and an avid student of classical music.