Stocks are ripping to ring in the New Year, and it is making it impossible not to be bullish. To speed along your profit-seeking quest, this piece will feature three of the best healthcare stocks to buy as we begin 2020.
Two are sector leading giants, large caps boasting beefy gains throughout December. Their trends point higher across all time frames, and, best of all, they followed the broader sector’s lead and pulled back last week to create a clean, lower-risk entry point. In fact, that’s the reason we’re focusing on the healthcare space to begin with. It retreated to the rising 20-day moving average and offers the best-looking setup of all the sectors right now.
The third stock is a small-cap lotto ticket that’s beginning to rise after a disastrous drop.
Without further ado, here are three of the best healthcare stocks to buy.
3 Healthcare Stocks to Buy: Canopy Growth Corporation (CGC)
We’ll begin with the most speculative play of the bunch — a pot stock. Canopy Growth Corporation (NYSE:CGC) scored a massive gain on Tuesday, rising nearly 10% on 16.4 million shares. The jump ushered CGC stock to the cusp of a breakout that could change the trajectory of its trend.
Because this is a trend reversal pattern, there’s a higher risk of failure — so risk management is imperative. But, if it works, significant profits could be in the offing.
My advice? Buy CGC on a break over $22.50 with a stop loss below $18.50. Falling below it will invalidate the bottoming formation, and the $29 area is a logical target.
Amgen Inc. (AMGN)
Amgen Inc. (NASDAQ:AMGN) offers a more traditional, trend-following pattern. Since the beginning of October, AMGN stock has been carving out a healthy uptrend with multiple pullbacks and breakout setups along the way. Another such pause formed over the past two weeks, creating a high base pattern.
Resistance has asserted itself at $245, providing a clear level that needs to be broken before the trend can continue. So, consider that your trigger.
In case the breakout fails, you can stop out below $238.50. That’s the low of the base, as well as the 20-day moving average.
This morning’s up-gap quickly filled, so AMGN may need some additional time before making a go at resistance. Regardless, it’s a great trade when and if it can reach and move past $245.
Merck & Co. (MRK)
Merck & Co. (NYSE:MRK) rounds out today’s trio with a classic bull retracement pattern. Last year’s uptrend was topped off by a strong, high volume up-gap on Dec. 20. Since then, we’ve seen a garden variety pullback form — allowing AMGN stock to digest the gains while creating a lower-risk entry point.
Like AMGN, Merck’s morning rally attempt was rejected. So, some additional backing-and-filling may be needed before a bonafide bounce emerges. Watch for support to form near $90, which is the rising 20-day moving average as well as the gap fill area. For now, MRK stock would need to take out this morning’s high of $91.30 before giving the green light to bullish trades.
If you’re looking for an options trade idea, I like the February $90/$95 bull call spread — which currently trades for $2.14.
As of this writing, Tyler Craig didn’t hold positions in any of the aforementioned securities. For a free trial to the best trading community on the planet and Tyler’s current home, click here!