Part 1

BlackRock Inc. (BLK)

Our first stock from the XLF for May is BlackRock Inc. (BLK), which plays an important role with its 1.70% weight within the leading ETF.

Company background and financial performance

BlackRock Inc. (BLK) is an American multinational investment company, headquartered in New York City. In fact, thanks to its great financial performance, Blackrock has become the world’s largest asset manager with $8.6 trillion in AUM (assets under management).

The company operates through 70 offices in over 30 countries around the world. BlackRock provides its clients with products that span the risk spectrum, such as active, enhanced and index strategies through a variety of different structures, including separate accounts, mutual funds, exchange traded funds (ETFs), as well as other investment vehicles.

By looking at the financials of the company, we shall say that thanks to its strong financial performance and market positioning, BlackRock has managed to beat earnings expectations in 3 out of the past 4 quarters, which has helped it further boost its share price after the reports and making more money for investors and shareholders.

The company’s strong liquidity position as well as its key strategic acquisitions are expected to help expand its footprint and market share. Moreover, the company keeps increasing its assets under management (AUM) balance to aid revenue growth despite the pandemic times we are living in. In fact, the Q1 financial results came better than expected – BlackRock reported earnings of $7.77 per share while analysts had expected $7.64.
Moreover, with the pandemic situation improving on a weekly and monthly basis, we would be expecting BlackRock to keep boosting its assets under management and overall performance, which would have a bullish effect on its share price in the future, making higher profits for traders and investors.


Technical analysis

By looking at the BLK, we shall say the stock has gone up from the $318 lows in March last year to the current levels at $819-$820. In fact, due to the great investment decisions of the company where the largest fund manager in the world has been following the huge bullish rally on the stock market ever since, the company stock has managed to almost triple in the past year. Quite impressive, right?

The daily chart clearly shows that the stock has found some resistance at the $820 highs and is currently forming a double top at that point, giving some indications for a potential short-term profit-taking correction that could easily send the price a bit lower before it becomes attractive to buy again. The first top was formed on the 15th of April and due to a lack of further buying activity the price made a correction towards the $793 lows, followed by another attempt to break that level to the upside. Yet, the price failed to break that resistance again in the very end of April and closed a candle right at that resistance mark, confirming the double top formation on the price. Moreover, the technical indicators such as RSI and Stochastics, together with Bollinger bands are already giving some short-term selling indications. The RSI and Stochastics touched the overbought territory and started crossing down, while the resistance at $820 matches with the upper Bollinger band, giving further bearish indications.
Therefore, as much as we would like to add the stock to our portfolio, we wouldn’t be buying immediately. We would rather prefer to wait for a short-term correction that could send the price towards the first strong support at $775 where we would expect to see some buying interest. In case the price breaks that support mark, we would expect to see some more buying pressure at the next major support at $775 where we would be keen on buying even more and being able to further maximize our profitability to the upside.


Chart: BLK

We would wait for a little correction and start buying once the price reaches the first strong support at $795. In case BLK breaks that support and drops further, we would be adding more to our long positions at the next strong major support at $775, which would give us a chance to get a better average price on our bullish position. Our initial profit-taking target is set at $818-$820, followed by the next target at $835-$845 where we would be fully cashing in our profits.

 


UnitedHealthGroup Incorporated (UNH)

Our first stock from the XLV for May is UnitedHealth Group Inc. (UNH), which plays a major role with its 6% weight in the leading ETF.

Company background and financial performance


UnitedHealth Group Inc. (UNH) provides a wide range of health care products and services, including maintenance organizations (HMOs), preferred provider organizations (PPOs), point of service plans (POS) and managed fee-for-service programs. United Health has got the most diverse and the largest membership base within the managed-care sector in the market, giving it significant competitive advantages. The company has been acquiring other competitive healthcare providers, helping it transform from a pure health insurer to a comprehensive healthcare provider. United Health operates through two segments: UnitedHealthCare and Optum, which helps it in cross-selling its products and services. UnitedHealthCare contributed for roughly 63% of the company’s revenues in 2020, while Optum accounted for 47% of the company’s sales. In fact, in Q4 2020 the company signed agreements to acquire multiple companies, expected to close the deal in the first half of 2021, which would further boost its financial performance and increase its presence in the market.

By looking at the financial results of the company, we shall say it delivered a very strong earnings result for the Q1 2021, reporting $5.31 per share, while analysts had expected only $1.42 per share. That in turn has been extremely beneficial for its share price performance and the stock has risen over 10% since the report has come out. The stock has formed a strong uptrend and might soon look like an attractive buying opportunity.


Technical analysis

By looking at the technical side of things, we shall say we are impressed by UNH’s performance. The stock rose from the $200 lows in March last year to reach the current $405, meaning it has more than doubled in value in the past 13 months. The company’s great financial performance and strong earnings beat, together with the overall bullish trend on the market have been boosting the stock and making high profits for traders and investors. In fact, there is no particular reason why the trend shouldn’t stay bullish and the price shouldn’t keep rising. Yet, we are not big fans of buying so high and would definitely prefer to wait for a short-term correction on the stock that could give us a chance to buy UNH at a bit of a discount and potentially close to a strong support level. The daily chart shows the strong support mark at $380, followed by the next major support at $364.
The technical indicators, such as RSI and Stochastics have already gone towards the overbought territory and are also giving some indications for a potential profit-taking correction in the short-term. Actually, the middle Bollinger band matches with the major support at $380, giving further bullish indications around that point.

In other words, we would definitely be looking to add the UNH stock to our portfolio at that major support level and make high profits to the upside, following the overall market positivism and bullish trend on the stock at the moment, expected to continue in the near future.


Chart: UNH

We would wait for a short-term pullback on the price and start buying at around $385-$390, just above the $380 support. Should the price drop further, we would be interested in adding more to our long positions at around $370, right above the $364 support where more buying pressure is expected. Our initial profit-taking target would be set at $410-$415, followed by the next target at $425-$430 where we would be fully cashing in our profits.



Sincerely,

This image has an empty alt attribute; its file name is logo.svg




Add a comment