More Good News For Stocks

Join TradeAlgo's Free Live Trading Session ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏  ͏ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ ­ [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!]( Hello investor, More good news for stocks Stocks are hitting all-time highs around the world. All three major indexes hit record highs yesterday — along with stock indexes in Europe and Japan. Why? Rate cuts have already arrived for some countries. Switzerland became the first rich country to cut rates. Bank of England and the Federal Reserve chose to leave rates unchanged, but they signaled a rate cut happening soon. Wall Street was uncertain briefly after an acceleration in inflation, but when Fed officials reaffirmed that rate cuts are still on the table, the anxiety is soothed for now. - “The outcome makes us more confident in our expectation for the first cut to come in June,” said Carl Riccadonna, chief U.S. economist at French bank BNP Paribas. Carl Riccadonna, chief U.S. economist at French bank BNP Paribas (Photo: Bloomberg) Phil Orlando, chief equity strategist at Federated Hermes, expects the earnings to rise for other sectors — a key difference from the past few months where Big Tech companies dominated the earnings growth. As a result, the market could rise on the strength of other sectors. However, Orlando believes that stocks could pullback as soon as the Fed starts cutting rates. It’d be a classic “buy the rumor, sell the news.” - “While things look all hunky-dory now, I think there’s a risk of a soft patch coming over the summer and fall,” Orlando said. A strong economy: Sales of existing homes surged 9.5% in February, crushing the expectations of a decline. It could be a sign of a growing strength in the economy. Initial jobless claims also decreased more than expected, indicating a robust labor market. The economy is certainly going strong. Now it is going to be on the next inflation data to see if price gains can cool down again. The Best Business Model In The World? Today’s Stock Pick: UnitedHealth Group Inc (UNH) UnitedHealth Group is the stock that may do excellent in any market condition. The reason is simple. Health insurance is an indispensable expense for any American. You can’t live without them*. (Or be stuck paying overpriced hospital bills!)* Therefore, UnitedHealth makes money in any economic cycle. Moreover, UnitedHealth holds a colossal amount of premiums. They are the “float” where it can invest to generate returns before paying out any claims in medical costs. That is, of course, the classic Warren Buffett formula. These premiums added up to a whopping $226.2 billion in 2021. That’s low-risk profits, as long as UnitedHealth invest them in safe assets. (Photo: REUTERS/Mike Blake) Higher premiums: UnitedHealth got a nice surprise on Feb. 2nd, when Medicare Advantage plan payments proposed for an 8% hike for 2023. In other words, it means premiums will be 8% higher, boosting UnitedHealth’s float. The increase was due to an effective 4.75% rate hike and another 3.5% risk adjustment. The risk adjustment was higher because of the impact of Covid. Many carriers were unable to document many patients' risk attributes during the crisis. Patients made fewer visits to physicians’ offices and in-home assessments. So, insurance companies don’t have precise data on patients. Hence the 3.5% risk premium. Want to hear something amazing? UnitedHealth did something brilliant. It formed a division called Optum that owns surgery centers and physician practices. And what does it mean? Imagine this scenario… A 70-year-old senior citizen with a UnitedHealth Medicare Advantage plan takes an operation at Optum’s surgery center and fills a prescription for his recovery through Optum’s specialty pharmacy. So, UnitedHealth (the insurance division) would pay premiums to Optum for its surgery and prescriptions. And guess what? UnitedHealth will pocket these premiums because they own Optum too. That means UnitedHealth makes money by: - Investing the float of premiums - And profiting off these premiums from its care delivery business UnitedHealth reports “intercompany eliminations” where it doesn’t count any revenue paid from UnitedHealth to Optum, except for the profits from these premiums. To understand how huge the business is, the intercompany eliminations soared by four times in a decade: (Source: Axios) To put it simply, UnitedHealth knows how to maximize each dollar of the premiums, turning it into a cash-machine business. The dream industry: And to make it even better, healthcare may be one of the best industries in America. According to the US Centers for Medicare & Medicaid Services, spending on health care in the US reached $4.1 trillion in 2020, equal to 19.7% of the nation's GDP. The growing cohorts of individuals aged 65+ and individuals aged 80+ point to the indicator that US health care spending will likely continue to grow going forward. That provides a major secular tailwind for UnitedHealth to capitalize on. Rock-solid earnings: UnitedHealth announced that it has a long-term outlook for earnings per share growth of 13% to 16% on average, with more than two-thirds of this growth driven by earnings from operations and the remainder from capital deployment. Its dividend yield is 1.53%, so you can expect a total of 14%+ annual returns on your investment if you combined EPS growth and dividend yield. Bottom line: UnitedHealth has a magical business model where it maximized every dollar of its premiums through float investing and care delivery business where it paid itself for the healthcare services. As a result, the business model is extremely stable, and you’d get above-average returns. Precisely, that’s why I said UnitedHealth is the perfect stock in any scenario – recession or not. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](