Investors must often contend with different market cycles. Even in a bull market, some sectors will lead at times. Tech has been leading for some time. Now, its returns have started to slow. But other sectors are starting to join the market rally.
That’s good news, as it opens up new investment and trading opportunities alike. Many sectors are great at outperforming the market over time, even if their monthly returns aren’t anything special.
For instance, health insurance companies tend to beat the market over time. But the key word is over time. That could be good news for companies like UnitedHealth (UNH), which just reported better-than-expected earnings.
UnitedHealth has traded flat over the past year, largely missing the most recent market rally. But shares trade at a reasonable 19 times forward earnings. And love ‘em or not, health insurance companies are here to stay – and they’re giant cash-generating businesses.
Action to take: Investors may like shares at current prices, as the response to earnings suggests an uptrend. UNH is also a dividend grower, with a starting yield of 1.6% at current prices.
For traders, the September $580 calls, last trading for about $10.85, could see mid-double-digit returns on a continued rally in shares over the coming weeks.
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.