Dow Jones health care stock UnitedHealth is holding up well within a flat base, gaining support from its 200-day moving average. UNH shares boast a rising relative strength line, making it a perfect pick for today's IBD 50 Stocks to Watch.
The stock rose 0.2% Tuesday in the midst of a broad-based stock market correction. It is still below its 50-day line but hugging the bottom of its base, which has a buy point of 553.23, according to IBD MarketSmith chart analysis.
UNH stock shows a strong 95 out of a perfect 99 IBD Composite Rating, per the IBD Stock Checkup. Investors can use this rating to easily gauge the quality of a stock's fundamental and technical metrics.
UnitedHealth is ranked No. 4 within IBD's Medical-Managed Care group, which ranks a lofty 16th out of the 197 industries IBD tracks. The group has moved up from No. 49 to No. 16 in the last three months.
Other top-rated companies in this group include Molina Healthcare, Humana and Cigna.
UnitedHealth: A Leader Among Health Care Stocks
The CAN SLIM investing strategy recommends looking for top companies in leading industries as a starting point in finding winning growth stocks.
Managed medical care companies seek to reduce the cost of health care and health insurance, while providing quality diagnosis and treatment to its members. Health care stocks have outperformed the S&P 500 so far this year, with the S&P Health Care ETF losing 14% compared the S&P's 23% loss.
UnitedHealth is one of the world's largest health care providers, with a current $477 billion market capitalization. The infrastructure bill signed by President Joe Biden in 2021 should improve profits, with provisions expanding Medicaid home services by $400 billion.
The company is due to release Q3 earnings on Oct. 14 when analyst consensus expects $5.45 per share on $80.52 billion in sales. It currently has a 3-year EPS growth rate of 11% and sales growth rate of 9%.
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