The stock market is a complex interaction of several factors. And while the headline numbers for the stock market are still strong, behind the scenes, a rotation is underway. That rotation includes a shift away from high-flying tech stocks.
Instead, other segments of the market are starting to show some strength here. That’s a good sign of a sector rotation underway, where different sectors take over the market lead.
For instance, the healthcare sector was a poor performer in 2024. But it’s starting to show some signs of life, and is looking even better when measured against flatlining tech stocks.
That could bode well for a health insurance play like Humana (HUM). Shares fell following its latest earnings, as the company expects to have a flat year. But against a backdrop of potential losses, that may be good enough to push shares higher over time.
Action to take: Humana shares are down 27% over the past year and trade near their 52-week lows. But shares are showing some signs of consolidation, which could lead to a move higher.
With Humana trading at 15 times forward earnings and paying a 1.3% dividend, this could be a reasonable play for a multi-month uptrend from here.
For traders, the April $270 calls, last trading for about $12.60, could see mid-to-high double-digit returns in the months ahead should shares continue their general trend higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.