Humana (HUM): a Medicare play, and more

As noted, given the current choppy/consolidating market conditions, adding a few defensive plays is a prudent strategy. Humana Inc. (NYSE: HUM) is an insurer worth an evaluation.

Humana's Medicare and Medicare prescription business, 50-state presence, likely substantial membership growth, and cost controls make it an "insurance company of significance." Another major positive: the currently underserved Medicare population, and an expanding Medicare demographic, the latter courtesy of the U.S. baby boom generation's retirement. HUM closed Thursday up $3.43 to $76.93.

The qualifiers? Competition on HUM's commercial business side is a hurdle, but overall, the risk/return for this stock is favorable.

[Note: Technical analysis agnostics stop reading here; all others continue.]

Technically, Humana's chart looks strong. The stock did straddle its 50-day moving average this summer, but has since remained solidly above it, while also clearing $65-$68 resistance. With a new 52-week high recently in place and a P/E of 21, HUM is not cheap, but it's a reasonable price to pay for this safety-and-growth hybrid.

Stock Analysis: Humana is a low-risk stock. Investors with an investment horizon longer than 1 year should be rewarded from HUM's shares. A preferred entry price if one were to buy would be below $75, if the market presents that opportunity. Sell / Stop Loss: $47.