43 health and medical 5-star stocks; 9 above 20- and 50-day moving averages; 2 buys?

One of the easiest ways to screen for fundamentally strong stocks is to look at the stocks that are rated four- or five-stars by Morningstar.com or by Sandard & Poor’s. At M*, a stock is rated based on a discounted cash flow model combined with assessments by the firm’s independent analysts, and a five-star stock is trading some 30% below the analyst’s and model’s fair market estimate of the value of the stock.

Many financial advisers are recommending

health care stocks–insurers, medical device makers, providers and drug makers and distributors–as possible safe havens in a bear market, but not all health care stocks are doing so well. Health insurers, for example, are in the toilet.

Today, 43 health sector stocks are rated five stars (5*) by M*. That’s a lot of health and medical sector stocks to be considered so under valued.

Next question: Which of these 43 health sector stocks are worth looking at right now? One answer is to search for stocks that seem to be moving up against the market. Historically, only about 25% of stocks move against a market, and fewer enjoy sustained rallies in bear markets. Of those 43 stocks, 18 are trading above their 50-day moving averages on two-month daily charts, a critical support level in the eyes of many technical analysts and momentum traders. Twenty two of the 43 stocks are above the 20-day moving average, another critical support level.

Another screen for stocks trading with positive moving average convergence divergence (MACD) charts shows that of the 43 M* 5* health stocks, 12 of those trading above their 50-day moving averages are flashing MACD buy signals and 9 of those also are above their 20-day moving averages. The nine are COV, EXEL, GIVN, JNJ (just had 20 DMA cross above 50 DMA), NVS, PBH, QLTI, TRMS and WPI. A tenth stock, BSX is above its 50 DMA and at its 20 DMA.

Interestingly, only two of the ten stocks have bullish price objectives on point and figure charts. COV closed Friday at $43.99 and has a $57 price objective. GIVN closed at $16.95 with a $23 price objective. Point and figure charts show the relative supply and demand for stocks, and the price objectives are important indicators. They change when stocks make major moves. The other eight stocks have bearish price objectives or have met them. Click on the charts to see hourly, daily and weekly charts.

M* estimates Covidien’s fair value is $58 and says consider buying at or below $43.50 and consider selling at or above $75.40. It estimates that Given Imaging’s fair value is $25 and says consider buying it below $18.80 and selling at or above $32.50.

Thus, there are two stocks that M* considers good long-term investments that may be worth a closer look because they appear to be on the move. Investigate before you speculate.

Full Disclosure: I have no positions in any of the stocks mentioned. For educational purposes only.

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