Goldman Sachs Says Traders Should Use Options to Load Up on These 5 ‘Strong Buy’ Blue Chips

UnitedHealth

A whopping 45% of fund managers recently surveyed have bought shares of this company. UnitedHealth Group Inc. (NYSE: UNH) operates through the following four segments.

Its UnitedHealthcare segment offers consumer-oriented health benefit plans and services for national employers, public sector employers, midsized employers, small businesses and individuals; health and well-being services to individuals age 50 and older, addressing their needs for preventive and acute health care services, as well as services dealing with chronic disease and other specialized issues for older individuals; and Medicaid plans, Children’s Health Insurance Program, and health care programs; and health and dental benefits.

The OptumHealth segment provides access to networks of care provider specialists, health management services, care delivery, consumer engagement and financial services. This segment serves individuals through programs offered by employers, payers, government entities and directly with the care delivery systems.

The OptumInsight segment offers software and information products, advisory consulting arrangements, and services outsourcing contracts to hospital systems, physicians, health plans, governments, life sciences companies and other organizations.

OptumRx is the segment that provides pharmacy care services and programs, including retail network contracting, home delivery, specialty and compounding pharmacy, and purchasing and clinical. It also develops programs in areas such as step therapy, formulary management, drug adherence and disease/drug therapy management.

The implied return for the 12-month call is 96%.

UnitedHealth Group stock comes with a 1.39% dividend. Goldman Sachs’s $595 target price is shy of the $595.72 consensus target. Wednesday’s close at $459.86 was down close to 7% on the day after the company cited rising costs as a big issue.

While options trading is not right for everybody, it is much easier to get the equivalent of 1,000 shares of any of these top companies by buying 10 option contracts than by owning the actual shares. However, if the stock does not move higher, or if shares crash lower, the entire investment in the options can expire worthless. So, time is always an especially important component. While not suited for conservative investors, buying long-dated call options on big blue chips that have lagged the market makes sense now.

Originally published at 24/7 Wall St.

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