Best Dow Stock to Own Next Week

UNH stock has historically outperformed the week of Memorial Day

May 25, 2018 at 2:09 PM
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UnitedHealth Group Inc (NYSE:UNH) stock is near the top of the Dow today, last seen 0.7% higher at $244.47, as traders digest a long-term partnership with Quest Diagnostics (DGX). What's more, UNH shares could once again lead blue chips during the holiday-shortened week, if recent history is any indicator, and the insurance concern's short-term options are attractively priced, to boot.

UnitedHealth stock has rallied roughly 17% since its early February lows. The shares gapped higher in mid-April thanks to the company's stellar earnings report, and earlier this week peaked at $249.17 -- within a chip-shot of their late-January record high of $250.79.

UNH stock chart May 25

As alluded to earlier, UNH stock could extend its upward momentum after Memorial Day, if past is prologue. The equity has been the best Dow stock to own during the holiday-shortened week, looking back 10 years. Specifically, UNH has averaged a weekly gain of 0.89%, and has ended the week higher 80% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White.

Despite the security's recent uptrend, UnitedHealth Group's short-term options are a bargain. The stock's Schaeffer's Volatility Index (SVI) of 17% is in just the 17th percentile of its annual range, implying that near-term options are pricing in relatively low volatility expectations.

Since 2008, there have been just five other times at which UNH stock was trading near annual-high territory while simultaneously sporting an SVI in the bottom 20% of its annual range. One month later, the blue chip was higher each time, averaging a gain of 3.06%.


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