The Dow has kicked off 2018 with an epic rally, touching record highs for a third straight day. A round of bullish analyst attention for several blue-chip stocks is helping the index shrug off lackluster December jobs data, with Boeing Co (NYSE:BA) leading the 30 Dow stocks higher. In addition, analysts are calling for record highs for fellow blue chips Wal-Mart Stores Inc (NYSE:WMT) and UnitedHealth Group Inc (NYSE:UNH) stocks.
Boeing Stock Could Rally Another 20%
Boeing stock is pacing the Dow gainers today, up 2.7% at $304.60, and fresh off an all-time peak of $305.10. Bolstering the aerospace titan is a double dose of upbeat brokerage attention, with Bernstein and Baird lifting their respective price targets to $357 and $380 — in uncharted territory, and representing gains of more than 20% from BA stock’s current price.
BA shares — no stranger to Week 1 outperformance — are now pacing for a weekly gain of 3.2%, which would mark their best since December, when the company hiked its dividend. But despite the stock’s long-term strength, there’s plenty of room for upgrades to lure more buyers to the table, considering seven of the 16 analysts following Boeing maintain tepid “hold” ratings.
Plus, an exodus of options bears could also be a boon for the blue chip. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the stock’s 10-day put/call volume ratio of 1.46 is in the 96th percentile of its annual range, pointing to a much healthier-than-usual appetite for long puts over calls lately.
In any case, now is an opportune time to scoop up short-term Boeing options. The stock’s Schaeffer’s Volatility Index (SVI) of 16% is in the 10th percentile of its annual range, pointing to muted volatility expectations priced into near-term options. Meanwhile BA sports a Schaeffer’s Volatility Scorecard (SVS) of 99, indicating the stock has handily exceeded options traders’ volatility expectations in the past year.
WMT Tops the Century Mark, Eyes $300B Market Cap
Walmart stock crept into triple-digit territory for the first time since mid-November, notching a record high of $100.38 earlier. The shares were last seen 0.3% higher at $99.88, after RBC lifted its price target to $106 from $96. WMT is now pacing for a fourth straight weekly win, and is encroaching on a market cap of $300 billion.
As with Boeing, the door is wide open for WMT upgrades. In fact, the majority of the 24 analysts following the big-box retailer consider it a “hold” or worse.
Meanwhile, the stock’s Schaeffer’s put/call open interest ratio (SOIR) of 1.16 is in the 77th percentile of its annual range, suggesting short-term options traders are more put-heavy than usual right now. An unwinding of pessimism in the options pits could also translate into tailwinds for Walmart stock.
Speculators who want to play WMT’s short-term trajectory can do so at a relative discount, too. The equity’s SVI of 16% is in just the 17th percentile of its annual range, and its lofty SVS of 98 indicates the blue chip has made bigger-than-expected moves on the charts in the past year, relative to what the options market priced in.
Wells Fargo Sees Record Highs Ahead for UNH Stock
UnitedHealth Group stock is up 1.6% at $228.11, after Wells Fargo lifted its price target to $252 from $245. The new price target represents expected upside of more than 10% to UNH stock’s current perch, and is well north of the equity’s all-time high of $231.77, tagged in early December.
Unlike BA and WMT, though, UnitedHealth is already beloved on Wall Street. Seventeen of 18 analysts consider the blue chip a “buy” or better, and call buying has ramped up in the past two weeks. The stock’s 10-day call/put volume ratio on the ISE, CBOE, and PHLX stands at 2.08 — in the 90th percentile of its annual range.
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