Back into a Big Health Care Play and Booking Triple-Digit Option Gains

You hit your stops on almost all tech-related positions in your Alpha Algorithm portfolio this past week.

That’s good news as you locked in 11 double-digit-percentage gains and two losses — an enviable ratio by any standards. You can see the details of these gains in the Portfolio Update section below.

This week’s Alpha Algorithm pick returns to a previous recommendation, UnitedHealth Group Incorporated (UNH), in which you just hit your stop on June 12 at $176.70 for a 10.42% gain. The stock is already bouncing back strongly.

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.

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

1. Fundamental Strength

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

2. Insider and Analyst Sentiment

This is 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. Pure Growth

The company is part of a strategy that selects companies from the S&P 500 Index, based on three growth factors: current internal growth rate, historical earnings per share (EPS) growth and historical sales/share growth.

4. Capital Strength

The stock is part of a strategy that seeks to outperform the market by selecting companies based on the strength of their balance sheets, long-term debt ratios and return on assets (ROA).

5. Large-Cap Alpha Growth

The company has been chosen as part of an alpha-seeking index that selects and weights growth stocks from the S&P 500 Growth Index. The proprietary methodology uses price appreciation — among more traditional factors — and weights the constituents based on their respective growth scores.

6. Large-Cap Alpha Core

The stock is part of a tiered, equal-weighted index of large-cap stocks selected from the S&P 500 that are expected to outperform the broader large-cap space based on an intricate methodology of ranking stocks according to their recent performance.

7. 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.

8. Large-Cap Momentum

The stock is part of a major hedge fund’s systematic strategy that invests in large- and mid-cap U.S. companies with positive momentum and that rank in the top third of total return over the prior 12 months, excluding the last month.

9. 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.

10. 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.

11. Goldman Sachs’ Active Beta

The stock is selected according to four factors — value, quality, momentum and low volatility. These, in turn, are based on criteria including book value, sales and cash flow scaled by share price, profit/assets or return on equity (ROE), risk-adjusted returns and daily standard deviation of returns.

12. Broker’s Best

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

13. Low-Interest-Rate Sensitivity

This is a large-cap U.S. stock selected for its low volatility and positive price performance in a rising-interest-rate environment.

Recommendation

Buy UnitedHealth Group Incorporated (UNH) at market today.

Place your initial stop at $166.00.

Options

If you want to play the options, I recommend the UNH September $180 calls (UNH170915C00180000), which last traded at $7.09 and expire on Sept. 15.

Portfolio Update

Sell all of your Citibank (C) July $60 calls (C170721C00060000), which last traded at $4.89 for 107.2% gain.

Here are the details of your recently exited positions.

1. CHTR stopped out 6/8 at $335 for a 10% gain.

2. CMCSA stopped out 6/8 at $41.50 for a 10.49% gain.

3. MSFT stopped out 6/8 at $71.50 for a 10.12% gain.

4. MU stopped out 6/8 at $32.15 for a 10.10% gain. The MU July $29 calls first traded after the stop at $4.10 for an overall gain of 75.80% in the calls.

5. AAPL stopped out 6/9 at $149.00 for a 25.33% gain.

6. GOOGL stopped out 6/9 at $962.50 for a 19.99% gain.

7. AMZN stopped out 6/9 at $968.00 for a 14.99% gain.

8. FB stopped out 6/9 at $149.50 for a 10.02% gain.

9. AMAT stopped out 6/9 at $44.90 for a 15.10% gain.

10. UNH stopped out 6/12 at $176.70 for a 10.03% gain.

11. LRCX stopped out 6/12 at $150.00 for an 8.22% loss. The LRCX September $160 calls first traded at $6 after the stop for a 43.93% loss.

Sincerely,

Nicholas A. Vardy