Merck Brings in Big Money

And the pharmaceutical company could rise even more due to strong sales growth and a healthy dividend. But another likely reason is Big Money lifting the stock.

Big Money Loves Merck

So, what’s Big Money? Said simply, that’s when a stock goes up in price alongside chunky volumes. It’s indicative of institutions betting on the shares.

Smart money managers are always looking for the next hot stock. And Merck has many fundamental qualities that are attractive.

This sets up well for the stock going forward. But how the shares have been trading points to more upside. As I’ll show you, the Big Money has been consistent in the shares.

You see, fund managers are always looking to bet on the next outlier stocks…the best in class. They spend countless hours sizing up companies, reading reports, speaking to analysts…you name it. When they find a company firing on all cylinders, they pounce in a big way.

That’s why I’ve learned how critical it is to gauge Big Money demand for shares. To show you what I mean, have a look at all the Big Money signals MRK has made the last year.

The last few weeks have seen Big Money activity too. Each green bar signals big trading volumes as the stock ramped in price:

Source: www.mapsignals.com

In the last year, the stock attracted 17 Big Money buy signals. Generally speaking, recent green bars could mean more upside is ahead.

Now, let’s check out technical action grabbing my attention:

• 1-month outperformance vs. Health Care Select Sector SPDR ETF (+7.4% vs. XLV)

Outperformance is important for leading stocks.

Merck Fundamental Analysis

Next, it’s a good idea to check under the hood. Meaning, I want to make sure the fundamental story is strong too. As you can see, Merck has been growing sales and earnings at big clips. Take a look:

• 1-year sales growth rate (+17.7%)
• 3-year EPS growth rate (+40.6%)

Source: FactSet

Marrying great fundamentals with technically superior stocks is a winning recipe over the long-term.

In fact, MRK has been a top-rated stock at my research firm, MAPsignals, for years. That means the stock has buy pressure, strong technicals, and growing fundamentals. We have a ranking process that showcases stocks like this on a weekly basis.

MRK has a lot of qualities that are attracting Big Money. It’s made the Top 20 report 116 times since 1990, with its first appearance on 01/15/1990…and gaining 2,178.8% since. The blue bars below show when Merck was a top pick:

Source: www.mapsignals.com

It’s been a top stock in the health care sector according to the MAPsignals process. I wouldn’t be surprised if MRK makes additional appearances in the years to come. Let’s tie this all together.

Merck Price Prediction

The Merck rally could have further to go. Big Money buying in the shares is signaling to take notice. Shares could be positioned for further upside, and it pays a nearly 3.0% current dividend. Given the historical gains in share price and strong fundamentals, this stock could be worth a spot in a diversified portfolio.

Disclosure: the author holds long positions in MRK in personal and managed accounts at the time of publication.

Learn more about the MAPsignals process here.

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