Double Your Money Every Week in 2010
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#2 WellPoint (WLP)
By Chris Johnson and Jon Lewis
Health care plan provider WellPoint (WLP) is one of three Fortune
500 companies based in Indianapolis, home of the AFC champs, the Colts. This sector has had a solid Q4 earnings track record, with most companies
exceeding Wall Street profit estimates. However, most are also issuing cautious outlooks for 2010. The conventional wisdom has been that health insurers
should do better as long as the path to healthcare reform gets stickier. With Democrats no longer holding the Senate majority needed to ramrod legislation
through, health care reform is in jeopardy. (Get 5
Ways to Profit From the Massachusetts Election.)WLP retreated to its 20-day moving average, an ascending
trendline that has supported several pullbacks during a three-month rally that saw the stock gain more than 50% in value. Should the market stabilize,
look for health care insurers to be a leader moving forward, and WLP should serve as an excellent proxy for the sector. We consider this a longer-term
play, so we’d suggest buying in-the-money WLP June 60 Calls to capture some upside for the first half of 2010.
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