UNH and WMT shares could be impacted by the Super Bowl result, if past is prologue
The highlight of this weekend for many Americans is Super Bowl LI, where the New England Patriots will face off against the Atlanta Falcons on Sunday evening. For the Patriots, this will mark their ninth trip to the NFL's championship game; for the Falcons, this will be the second Super Bowl appearance ever. So while the broader market is enjoying a rally this morning, we're looking ahead at shares that could rally or sell off following a Tom Brady win. The tables below show the 10 best and 10 worst stocks, historically, after a Patriots Super Bowl victory, based on rest-of-year returns. The data is courtesy of Schaeffer's Senior Quantitative Analyst Rocky White, and two particular names of interest are Dow components UnitedHealth Group Inc (NYSE:UNH) and Wal-Mart Stores Inc (NYSE:WMT).
Healthcare concern UNH has been enjoying a long-term climb up the charts, adding 41% year-over-year at $161.39. The stock's 50-day moving average has been limiting pullbacks lately, following a record high of $164 in mid-December. Perhaps a Patriots victory could put the wind back in UNH's sails. After all, the stock has seen positive returns through year's end after every previous New England Super Bowl win, averaging a gain of 26%.
Analysts appear confident in UNH, with 18 of 19 giving the shares a "buy" or better recommendation. But options traders don't appear convinced. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), UnitedHealth Group Inc's (NYSE:UNH) 10-day put/call volume ratio of 1.80 ranks in the top quartile of all readings from the past 12 months. (Though, some put buyers may be shareholders protecting paper profits.)
Meanwhile, WMT could be in trouble, should the Patriots take home the Vince Lombardi Trophy. Following New England's four previous wins, the retail giant has never managed a positive rest-of-year return, and has averaged a 14% loss. Notably, WMT has historically been the top performer after the Patriots lost -- but more on that later today.
WMT shares have been slumping since August, and are down 3.5% so far in 2017, at $66.68. And it looks like traders and analysts are already bracing for further losses. For starters, two-thirds of tracking brokerage firms recommend holding or selling the stock. Plus, WMT's 10-day put/call volume ratio of 3.08 at the ISE, CBOE, and PHLX -- showing three Wal-Mart Stores Inc (NYSE:WMT) puts purchased for each call over the last two weeks -- ranks just 1 percentage point shy of an annual peak.
For traders taking a broader approach through the end of the year, it may be helpful to know where the Dow could be headed as a whole. Well, the table below shows rest-of-year returns following each of the Patriots' prior Super Bowl appearances. A win for New England has resulted in an average loss of 2.9% -- due entirely to the 2002 sell-off. A loss, meanwhile, has seen three positive returns out of four, but with an average gain of 3.2%.
Historical returns following wins by either an American Football Conference (AFC) or National Football Conference (NFC) team seem to concur that a Patriots loss would be better for the stock market, with NFC victories historically yielding a roughly 11% gain for the Dow through the rest of the year, and positive 88% of the time. This clearly outdoes the 3.8% average gain following an AFC triumph, with 67% positive. But as we explored a couple of years ago, there are many stock theories related to Super Bowl outcomes, and randomness ought not be discounted.
Don't miss Schaeffer's free weekly stock market forecast. Sign up now for Monday Morning Outlook.