UnitedHealth Group Inc (UNH) — UNH stock pulled back 1% on Friday, and further selling could provide a great entry point for nimble traders who are ready to act.
This leading health care services company provides benefit services to more than 40 million people in the United States and nearly 5 million in Brazil. While industry members face mounting competition, UnitedHealth Group’s geographic and product diversity, as well as its strong management, should allow the company to continue to perform well even during economic rough patches.
S&P Capital IQ Equity Research rates UNH stock a “Buy,” noting that the company should be able to continue to increase market share thanks to its competitive offerings and solid cash flow. Its analysts expect revenue to increase almost 16% this year, thanks in part to increases in Medicare and Medicaid memberships and recent acquisitions. Plus, UnitedHealth Group’s decision to withdraw from most of the government’s public health care exchanges should cut losses associated with those plans.
In April, Capital IQ raised its 12-month target on UNH stock by $14 to $154, saying it is expected to grow faster than its peers.
Last week, UnitedHealth Group raised its quarterly dividend to 62.5 cents per share, for a current annual yield of 1.8%, with the next one to be paid to all shareholders of record on June 17.
Turning to the chart, in mid-March, UNH stock broke out of a one-year consolidation from a cup-and-handle formation. Higher-than-average volume supported the breakout, as did a buy signal from the MACD indicator.
A clear bullish trading channel has been formed with a top at about $145 and support at about $132. The channel is rising at a sharp angle and MACD is overbought. So, traders could take advantage of a quick pullback to $135 to get a better entry price.
Place a good ’til canceled (GTC) limit order to buy UNH stock at $135, since its powerful bull channel will likely only provide a single opportunity to get into shares on a pullback.
