Analyses of American health sector stocks

Analysis: 2013.06.12    Published: 2013.06.21

As average life expectancy increases, it poses a challenge for the health sector that needs to handle a population with a growing share of elderly people. Consequently the public sector might have to increase its operating costs, and private investors will look for investment opportunities in the health sector.

Many health sector companies are listed on the American stock exchanges. We analyse four stocks that can be interesting investment objects both in the short and long term. The stocks have high turnover and low risk, and are therefore suitable both for active and less active investors. All these stocks are on the S&P500, and they are listed on the New York Stock Exchange (NYSE).

Abbott Laboratories (ABT)

Abbott Laboratories has over 90,000 employees in over 130 countries working on research, development, production and sales of health related products. The stock price shows good development in a rising trend. The trend shows that investors are positive and interpreting news from the company positively. Therefore investors are willing to pay ever more for the stock when they see that the company meets its targets. Thus a continued positive price development within the rising trend is indicated. The price has established support at 36 dollars. When the price has fallen to 36 dollars before, there have been a majority of buyers wanting to get into the stock. This then stopped a further price reduction and gave a reaction up. Thus it can be a good buying opportunity for short term investors if the price should approach 36 dollars again. Trends can also be used as trading levels for short term investors. There is little resistance above today’s level, so the upside is good.

Investtech's assessment: Positive Candidate

Medtronic (MDT)

Medtronic develops and sells medical equipment. The stock price fell significantly during the financial crisis of 2008, and the stock was traded at less than 25 dollars in early 2009. Buy signals were triggered from several formations last summer and the price then established a rising trend. In the past month, the price has met resistance at the ceiling of the trend channel, where many investors have previously chosen to cash in their profits. In the short term, this can give a reaction down towards the next support level at approximately 47.20 dollars, which can be a good buying price. This can be a potential trading level for short term traders. In the longer term, further rise within the trend is indicated. If the price breaks up through the ceiling of the trend channel and is established at over 52 dollars, as a consequence of a majority of positive investors, this will signal further price increases with a steeper rate of increase than before.

Investtech's assessment: Positive Candidate

Merck & Company (MRK)

The pharmaceutical company Merck & Company lost almost 2/3rds of its value during the financial crisis of 2008-2009 when the stock price fell from 60 to 21 dollars. The price is now in a rising trend, which shows that investors are positive again and that the company is meeting expectations. There is still an upside of 25 percent compared to listings from before the decline started in 2008. In the short term, the price fluctuates between approximately 45 and 48 dollars, which can be potential trading levels. A buy signal was triggered after resistance at 48 dollars was broken at the turn of the month May/June. If the price falls back below 48 dollars, short term investors might consider buying at around 45 dollars and selling close to 48 dollars. In the longer term, a continued increase within the rising trend is indicated.

Investtech's assessment: Positive Candidate

Pfizer (PFE)

Pfizer is a pharmaceutical company which is included in the important Dow Jones Industrial Average index. The price is in a good rising trend. This shows that the company is meeting investors’ expectations. More investors become positive and want to buy stocks in the company. For long term investors, further rise within the trend is indicated. In April/May the price fell back from the ceiling of the trend channel after the price was overbought on RSI. Listings near the support of the trend channel floor can be good buying opportunities for short term investors, up towards resistance at 31 dollars. There is also support at 26 dollars. Breaks below this indicate a turn down and sale at stop loss.

Investtech's assessment: Positive Candidate

These analyses were written for Nordnet in connection with a campaign on American health care companies.

Keywords: health sector, positive candidate, ABT, MDT, MRK, PFE