PUBLISHED FRI, NOV 15 201912:05 PM EST Keris Lahiff@KERISALISON
The Dow
Jones Industrial Average just hit a fresh record, but under the
hood it’s more complicated.
Eleven Dow stocks, or more than a third of its
components, are still in a correction or worse – those include Cisco, 3M, Pfizer, Exxon
Mobil, Boeing and UnitedHealth among
others.
Two traders agree that one of those stocks is
the best way to play catch-up.
“The one stock that does look pretty good … is
UnitedHealth,” Matt Maley, equity strategist at Miller Tabak,
said Thursday on CNBC’s “Trading Nation.” “Here’s a stock that had a
really tough time over the summer when Sen. Warren started moving up in the
polls, but that kind of correlation seems to have gone by the wayside because,
as she has stayed up in the polls, the stock has been able to bounce back on a
technical basis.”
From their peak in July to a trough in early
October, UnitedHealth shares fell more than 20%. Since then, they have bounced
21%.
“The stock made a nice double bottom in the very
early part of the fall, and now it’s rallied up to its one-year trend line. Now
it is getting a little overbought on a very short-term basis so it may need to
take a little bit of a breather here, but if it can break above that trend line
it’s certainly going to be very positive for the stock,” Maley said.
Mark Tepper, president of Strategic Wealth
Partners, adds that broader industry issues that have plagued UnitedHealth
could be dissipating.
“All these managed care stocks have
underperformed this year because of the possibility of ‘Medicare for All’ which
in our opinion is highly unlikely,” Tepper said during the same segment. “These
stocks are beginning to act a heck of a lot better, and almost all of them are
giving us better-than-expected results on their earnings calls.”
However, Tepper prefers a different stock in the
managed care space – CVS.
“The reason for that is you’re getting the same
exact vertically integrated business model that you get with UnitedHealth with
the valuations about 33% lower,” he said.
Disclosure: Strategic Wealth Partners holds CVS.
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