RSS feedWell, it seems that with so much fun to be had in the stock markets, my friend has decided to add funds to portfolio B. Just to review, the strategy in Portfolio B is equally weighted and stock selection is done on a more fundamental basis than in Portfolio A. Buy points are made on chart analysis or expectations of a significant catalyst within the year. With that in mind, a purchase was made this morning.
Aetna has had a terrific year with ROE of 18% and quarterly earnings growth of 15%. It maintains a P/E of 16 and PEG of .99 both also lower than industry average. More importantly, its chart shows the stock coming out of what looks to be an intermediate term (4 month) base. We had a breakout on good volume, strong RSI, and increasingly positive MACD last week and, over the last week or so, we had an expected retraction caused by old investors pulling out happy to break even. Today’s buy is a little preemptive given that the handle of the base has not quite formed. But, given the strong fundamentals and megacap valuation that Aetna holds, I’m comfortable with the downside risk given the bullishness in the technicals.
September 27th, 2007 at 11:49 am
AET is a pretty good stock and should do pretty well over the long run. I think UNH looks a little cheaper, but it has its own issues. HUM has been absolutely on fire, but looks a little overvalued.
September 27th, 2007 at 11:53 am
Haha, Aaron, great comment! I just bought HUM for Portfolio A. Doing a post on it now. I agree that its valuation doesn’t look terribly good, but I’m going to try to make an argument for it. Give me like 20 minutes.