A gain of 28.24% in 2018 for shares of Pfizer Inc. (PFE) tells a story of unusual bullish trading activity accompanying the move. It’s not a shock that the company has been in an uptrend recently, as the healthcare sector has been on fire lately, with many stocks alerting similar bullish trading activity. The Pfizer story is one in which the company has a strong foothold in many areas of healthcare and a long history, as it was founded in 1849!
I’ll go into the fundamental picture later, but the true tell on the near-term trajectory of the stock lies in its trading activity. At many points in 2018, Pfizer shares have increased in price alongside an increase in volume. This can be indicative of smart money accumulating shares. The bottom line here is that the manner in which a stock trades can oftentimes alert you to the forward fundamental picture more so than simply looking at a company’s financials alone. (See also: Pfizer May Rise 8% to Highest Price Since 2000.)
For Mapsignals, the strongest indicator of positive price momentum is obtained by measuring potential institutional buying in the shares. In 2018, Pfizer has logged 20 of these rare signals (see chart). We like to see continual bullish activity in the shares alongside solid forward fundamentals, as this indicates that demand for the stock should increase over time.
In the chart below, Pfizer stock broke out to new 52-week highs recently. The shares have clearly been in demand, and they should continue higher over the long term:
Mapsignals’ goal is to identify tomorrow’s top stocks today. We’re basically looking for outlier companies with healthy fundamentals accompanied by outsized, unusual institutional trading activity. By studying these data points, we can make an educated guess as to which equities institutions are trafficking in and marry this information with fundamentally sound companies. We want the odds on our side when looking for the highest-quality stocks.
When we decide on the strongest candidate for long-term growth, we consider many technical areas important to success. A few of these factors for Pfizer are as follows:
- Year-to-date (YTD) outperformance vs. market: +19.91% vs. SPDR S&P 500 ETF (SPY)
- YTD outperformance vs. sector: +14.06% vs. Health Care Select Sector SPDR ETF (XLV)
- Bullish unusual trading signals
Just to show you graphically what our unusual trading activity signal looks like, have a look at all of the UI signals Pfizer stock has made over the past year:
Now, we take it a step further and score the best stocks showing this activity. Below, you can see the historical times when Pfizer stock made buy signals for Mapsignals in 2018. These are the highest-rated signals in our stock universe:
On top of a great technical picture, one should also look under the hood to see if the fundamental picture supports a long-term investment. As you can see, Pfizer has solid EPS growth rates:
Pfizer checks the box on strong technicals and fundamentals while showing bullish institutional momentum in 2018. We believe that the current level for the shares is in position for further upside. All of this points to further long-term bullish action for the stock. (For more, see: Pfizer: 7 Secrets You Didn’t Know.)
The Bottom Line
Pfizer stock represents a potential buying opportunity for the long-term investor. Given the solid EPS growth, dividend growth and multiple unusual accumulation signals, this stock could be worth a spot in an income-oriented portfolio.
To learn more about Mapsignals’ institutional signals, please visit our “About Us” page.
Disclosure: The author holds no position in Pfizer shares at the time of publication.