Buying Back into a Leading Health Care Play

This week’s Alpha Algorithm returns to a previous recommendation, UnitedHealth Group Incorporated (UNH), which you stopped out of on Dec. 5 at $156.65 for a 10.91% gain.

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.

UnitedHealth Group Incorporated (UNH) versus the S&P 500 Year to Date.

11 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. 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 one of a tiered, equal-weighted index of large-cap stocks selected from the S&P 500 and 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 historically has 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.

Recommendation

Buy UnitedHealth Group Incorporated (UNH) at market today.

Place your initial stop at $146.00.

Options

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

Portfolio Update

Click here to view the Portfolio Update.

Sell your position in Visa Inc. (V) at a slight gain as this position is now included in only six Alpha Algorithm strategies.

Finally, as this is the final issue of the Alpha Investor Algorithm for 2016, I want to wish you and yours a Merry Christmas, Happy Holidays and a Happy and Prosperous New Year.

I will take my traditional holiday break next week and provide my next update on Jan. 5. I will plan to have the first Alpha Algorithm recommendation of 2017 for you then.

Sincerely,

Nicholas A. Vardy