Sensitivity of material stocks
The value of beta for mining companies, namely, Freeport-McMoRan (FCX), Nucor (NUE), Alcoa (AA), and Allegheny Technologies (ATI), is more than one. As a result, they’re more sensitive to the broad market movement. The beta is less than one for Newmont Mining (NEM). It’s into gold mining. Gold’s a safe investment avenue during volatility. As a result, Newmont Mining is less sensitive to the market movement. International Paper (IP) and Avery Dennison (AVY) have a beta of more than one but less than the mining companies. Therefore, their fall in the stock prices is less compared to the mining stocks mentioned above.
Moving average analysis of Alexion and other healthcare stocks
The above chart presents few of the healthcare stocks along with their respective moving averages.
The healthcare sector was the top performing component sector of the SPDR S&P 500 ETF (SPY) on December 8. The Health Care Select Sector SPDR ETF (XLV) rose by 0.2% on the day. The above chart presents the sector’s top performing stocks on Tuesday, December 8. These stocks are Alexion Pharmaceuticals (ALXN), Universal Health Services (UHS), Celgene (CELG), Biogen (BIIB), Regeneron Pharmaceuticals (REGN), and HCA Holdings (HCA). They rose by 5.3%, 2.7%, 2.8%, 2.4%, 1.8%, and 1.3%, respectively, on December 8.
- Except for Universal Health Services (UHS) and HCA Holdings (HCA), all of the remaining stocks mentioned above are biotech stocks. In contrast, UHS and HCA provide healthcare facilities.
- The overall value of the beta, coefficient of sensitivity, is high for the healthcare sector. As a result, healthcare stocks are more volatile compared to other sector stocks. However, beta values for drug companies are more than those of healthcare facilities providers. Therefore, UHS and HCA are less volatile stocks because their beta is less than one.
- The average trailing one-year return of the above stocks is 0.6% as of December 8. From the above stocks, only ALXN settled at $188.72. It was above its moving average values. ALXN’s 100-day, 50-day, and 20-day moving average values were $175, $169, and $174, respectively. This suggests an upwards trend in the stock’s price movement.
- ALXN’s upward growth potential is around 15%, according to analysts’ stock price target. The stock earned 13 “buy,” five “hold,” and no “sell” recommendations.
In the next part of this series, we’ll analyze SPY’s key stocks as of December 8.