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The top 10 things to watch in the stock market Monday

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The top 10 things to watch Monday, Dec. 11 1. U.S. stocks are muted Monday following last week’s push to a new 52-week high in the S & P 500 , helped by a stronger-than-expected jobs report Friday. Good economic news is good news for the stock market, for now, with investors looking ahead to Tuesday’s consumer price index report. But we’ll learn what the Federal Reserve makes of the state of the labor market and inflation when the central bank convenes this week for its final meeting of the year. 2. Bank stocks like Club name Wells Fargo became “extraordinary performers” last week, according to Jim Cramer’s Sunday column. “The percentage gains for bank shares and the pretty stock charts, all wondrous, look like they are in their infancy,” he writes. 3. Health insurer Cigna abandons its pursuit to acquire Club holding Humana — a deal that was misguided from the start because it never would have received regulatory approval. Cigna announces a new $10 billion stock buyback. And shares of Humana rally roughly 2% in premarket trading. 4. Occidental Petroleum announces plans to buy privately held CrownRock for $12 billion in cash and stock , while raising its quarterly dividend by 4 cents, to 22 cents per share. Before the deal announcement, Morgan Stanley had upgraded Occidental to overweight from equal weight, with an unchanged price target of $68 a share. 5. More analysts are warming up to energy stocks after last week’s carnage. Citi upgrades Club holding Coterra Energy , along with EQT and Southwestern Energy , to a buy. Coterra is the firm’s top large cap pick, with a $30-per-share price target based on capital-efficiency improvements. 6. Goldman Sachs upgrades Abbvie to buy from neutral, with a $173-per-share price target. The firm cites revenue that has proved more resilient than expected, along with the drug maker’s recent deployment of capital to build out its pipeline. Over the past two weeks, Abbvie has shelled out nearly $20 billion in cash to acquire ImmunoGen and Cerevel Therapeutics. 7. JPMorgan raises its price targets on a handful of cybersecurity stocks, including CrowdStrike (to $269 a share from $230), Club name Palo Alto Networks ($326 from $272) and Zscaler ($212 from $200). 8. Citi upgrades Nike to buy from neutral, while raising its price target on the stock to $135 a share, up from $100. The firm sees margin recovery beginning in the second quarter of next year through 2025, helped by easing freight costs, leaner inventories and a shift to direct-to-consumer. 9. Jefferies upgrades Best Buy to buy from hold, while raising its price target to $89 a share, up from $69. Analysts at the bank think this call won’t take much to work, with expectations low and the stock cheap and yielding a 5% dividend. 10. Citi resumes coverage of Club holding Broadcom with a buy rating and $1,100-a-share price target. The firm sees the chipmaker’s artificial-intelligence business offsetting the cyclical downturn in the semiconductor business, along with strong accretion from its recent acquisition of VMware. We thought the company reported a better quarter last Thursday than what the market gave it credit for. (See here for a full list of the stocks at Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

The top 10 things to watch Monday, Dec. 11

1. U.S. stocks are muted Monday following last week’s push to a new 52-week high in the S&P 500, helped by a stronger-than-expected jobs report Friday. Good economic news is good news for the stock market, for now, with investors looking ahead to Tuesday’s consumer price index report. But we’ll learn what the Federal Reserve makes of the state of the labor market and inflation when the central bank convenes this week for its final meeting of the year.

2. Bank stocks like Club name Wells Fargo became “extraordinary performers” last week, according to Jim Cramer’s Sunday column. “The percentage gains for bank shares and the pretty stock charts, all wondrous, look like they are in their infancy,” he writes.

3. Health insurer Cigna abandons its pursuit to acquire Club holding Humana — a deal that was misguided from the start because it never would have received regulatory approval. Cigna announces a new $10 billion stock buyback. And shares of Humana rally roughly 2% in premarket trading.

4. Occidental Petroleum announces plans to buy privately held CrownRock for $12 billion in cash and stock, while raising its quarterly dividend by 4 cents, to 22 cents per share. Before the deal announcement, Morgan Stanley had upgraded Occidental to overweight from equal weight, with an unchanged price target of $68 a share.

5. More analysts are warming up to energy stocks after last week’s carnage. Citi upgrades Club holding Coterra Energy, along with EQT and Southwestern Energy, to a buy. Coterra is the firm’s top large cap pick, with a $30-per-share price target based on capital-efficiency improvements.

6. Goldman Sachs upgrades Abbvie to buy from neutral, with a $173-per-share price target. The firm cites revenue that has proved more resilient than expected, along with the drug maker’s recent deployment of capital to build out its pipeline. Over the past two weeks, Abbvie has shelled out nearly $20 billion in cash to acquire ImmunoGen and Cerevel Therapeutics.

7. JPMorgan raises its price targets on a handful of cybersecurity stocks, including CrowdStrike (to $269 a share from $230), Club name Palo Alto Networks ($326 from $272) and Zscaler ($212 from $200).

8. Citi upgrades Nike to buy from neutral, while raising its price target on the stock to $135 a share, up from $100. The firm sees margin recovery beginning in the second quarter of next year through 2025, helped by easing freight costs, leaner inventories and a shift to direct-to-consumer.

9. Jefferies upgrades Best Buy to buy from hold, while raising its price target to $89 a share, up from $69. Analysts at the bank think this call won’t take much to work, with expectations low and the stock cheap and yielding a 5% dividend.

10. Citi resumes coverage of Club holding Broadcom with a buy rating and $1,100-a-share price target. The firm sees the chipmaker’s artificial-intelligence business offsetting the cyclical downturn in the semiconductor business, along with strong accretion from its recent acquisition of VMware. We thought the company reported a better quarter last Thursday than what the market gave it credit for.

(See here for a full list of the stocks at Jim Cramer’s Charitable Trust.)

What Investing Club members are reading right now

As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.

THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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December 11, 2023

These stocks are overbought and could be due for a pullback

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November 24, 2023

How UnitedHealth Group grew bigger than the nation’s biggest banks

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UnitedHealth Group has the highest price per share of any company on the Dow Jones Industrial Average and it’s the tenth heaviest-weighted stock on the S&P 500.

In fact, not only is UnitedHealth the biggest health-care conglomerate in the United States based on market cap and revenue, it’s even bigger than JPMorgan Chase, the nation’s largest bank.

And it is a Wall Street darling, with experts optimistic about the company’s future: 22 of 25 analysts currently label it a buy.

“If I had to pick one stock, only one stock to buy, I’d buy United[Health],” said Ana Gupte, principal at AG Health Advisors.

UnitedHealth “has had superior stock performance over everybody else for two reasons,” said Lance Wilkes, managing director and senior research analyst at Bernstein Research. “One would be strategic vision and the other is strategic capital management.”

UnitedHealth has increased its annual revenue since 2012 by more than $100 billion, when adjusted for inflation. It achieved this by engaging in a unique acquisition strategy. It started with smaller deals that have grown while many of UnitedHealth’s competitors such as Aetna and Humana or Anthem and Cigna tried to broker much larger ones, only to be stopped by regulators.

Conversely, UnitedHealth leaned into a vertical-integration strategy, buying up smaller companies and building them into its growing health-care business.

UnitedHealth’s size makes it “relatively immune to economic cycles” due to the company’s wide diversity, Gupte said. “It makes it very attractive from an economic cycle and a macro environment perspective.”

Until recently, its acquisition strategy allowed it to grow without catching too much scrutiny from regulators. But in January 2021, UnitedHealth and Change Healthcare announced a nearly $8 billion all-cash deal that was challenged by the Department of Justice due to antitrust concerns.

Health-care companies “are becoming more and more [like] utilities,” Wilkes said. “Consequently, I think they’re going to have very large market shares because … you wouldn’t want redundant services through the system.”

“I think at this point you we would consider UnitedHealth Group just kind of like … core health infrastructure at this point in America,” said Matt Stoller, director of research at the American Economic Liberties Project and author of “Goliath: The Hundred Year War Between Monopoly Power and Democracy.” “It’s too big to manage.”

“UnitedHealth Group is committed to improving the health system for everyone, advancing evidence-based practice and aligning incentives across the system to ensure people get the right care at the right time in the right place,” UnitedHealth Group told CNBC.

“Because we serve people throughout every aspect of the health system, we have a unique ability to identify opportunities to better integrate care and benefits, develop solutions and deploy them at scale to improve access, lower costs and make the experience better for patients and providers,” it said.

Watch the video above to learn how UnitedHealth Group grew so big and what that means for the U.S. health-care system.

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May 20, 2023