Will UnitedHealth Group See Its Stock Surge Higher?

With shares of UnitedHealth Group (NYSE:UNH) trading around $62, is UNH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

UnitedHealth Group is a diversified health and well-being company. The company operates in four segments: Employer & Individual, Medicare & Retirement, Community & State, and Optum. Through its segments, UnitedHealth Group serves individual consumers and employers; the health needs of seniors; the public health marketplace, offering states Medicaid solutions; and health system participants, including consumers, physicians, hospitals, governments, and pharmaceutical companies. Adequate healthcare is very important to most consumers and companies. UnitedHealth Group is able to provide healthcare products and services to a growing number of concerned individuals and companies around the world.

T = Technicals on the Stock Chart are Strong

UnitedHealth Group stock has come a very long way since establishing lows during the 2008 Financial Crisis. The stock is now trading right at all-time high prices, so it may pause before coasting higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, UnitedHealth Group is trading slightly above its rising key averages, which signal neutral to bullish price action in the near-term.

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UNH

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of UnitedHealth Group options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

UnitedHealth Group Options

26.23%

96%

95%

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

July Options

Flat

Average

August Options

Flat

Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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