The over-the-counter (OTC) medicine business is thriving amid a slowing economy. Large pharmaceutical companies, like GSK, have divested their OTC divisions to fund drug development. GSK’s OTC business, now trading as Haleon PLC, is performing exceptionally well, with Haleon stock up around 40% since its 2022 demerger. Haleon’s success stems from its portfolio of “power brands,” including Sensodyne, Advil, and Centrum, which generate 60% of sales. The company’s focus on high-margin brands in essential health categories allows it to remain resilient amid economic uncertainties.
Haleon trades at a higher multiple than its peers but benefits from its brand strength, cost-of-living trends, and reduced litigation risks. With expectations of high-single-digit profit growth and a 1.54% dividend yield, Haleon stock is poised to capitalize on trends like preventive medicine, OTC growth, and an aging population.
Insights
- Haleon thrives due to its focus on high-margin, essential health brands, impacting Haleon stock positively.
- Market shifts favor Haleon amid economic slowdowns and investor rotation.
- Reduced litigation risks and share buybacks enhance investor confidence, further boosting Haleon stock.
The Essence (80/20)The Origins and Evolution of the 80/20 Principle The Discovery by Vilfredo Pareto In 1897, Italian economist Vilfredo Pareto uncovered a striking pattern in his study of wealth and...
- Core Topics: OTC medicine business growth, pharmaceutical company divestments, Haleon’s strategic brand focus, economic resilience, and investor confidence.
- Detailed Descriptions: Key drivers include Haleon’s strong portfolio of essential health brands, favorable market trends, and strategic financial maneuvers reducing risk exposure, all of which are reflected in Haleon stock.
The Guerilla Stock Trading Action Plan
- Monitor trends in preventive medicine and OTC market growth.
- Assess Haleon’s financial performance against competitors like Kenvue.
- Consider Haleon stock for investment due to its brand strength and strategic positioning amid economic uncertainty.
Blind Spot
Potential future litigation risks or regulatory changes impacting the OTC sector could affect Haleon’s profitability.
Haleon (HLN) Technical Analysis (daily)
This daily chart of Haleon Plc (HLN) displays a strong uptrend since mid-June, with the stock price moving steadily higher. The 50-day moving average (currently at 9.35) has been above the 200-day moving average (currently at 8.63) since mid-July, confirming a bullish trend known as a “golden crossWhen the 50 day moving average crosses above the 200 day moving average, it is called a Resurrection Cross. Conversely, when the 50 day moving average crosses below the 200 day mov....” The stock price is now trading well above both moving averages, suggesting continued bullish momentum.
Key support levels can be identified around 9.35 (the 50-day moving average) and 8.63 (the 200-day moving average). These moving averages are likely to act as dynamic support levels in case of a pullback. A stronger support level for Haleon stock is seen around 9.00, where the price consolidated before the recent upward surge. Resistance is less defined due to the stock trading at all-time highs, but a psychological resistance could emerge around the 10.50 mark, as this is a round number and close to the recent highs.
The Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... (RSI) is currently at 80.55, which is in the overbought territory, suggesting that the stock may be due for a short-term correction or consolidation. However, overbought conditions can persist in strong uptrends, so this does not necessarily indicate an immediate reversal.
The On-Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... (OBV) is rising steadily, reflecting strong buying pressure. This supports the bullish outlook as it shows that volume is confirming the price increase.
The Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ... is at its upper range, suggesting overbought conditions similar to the RSI, reinforcing the idea of potential short-term consolidation or pullback. However, it has not yet shown a bearish crossover, indicating the uptrend could still continue.
The Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati... is at 2.56M, showing a slight decrease from its recent peak, suggesting that while buying pressure remains, there might be some waning momentum.
The MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More (Moving Average Convergence Divergence) line (0.22) is above the signal line (-0.02), and both are above zero, which is a bullish signal. The histogram is in positive territory, but the recent bars are decreasing, indicating that while the momentum remains positive, it might be slowing down.
Time-Frame Signals:
3 months: Buy – The chart shows a strong bullish trend with increasing price and buying volume. However, watch for a possible short-term pullback due to overbought RSI.
6 months: Buy – The trend remains positive with the 50-day moving average above the 200-day moving average, signaling ongoing strength.
12 months: Hold – Although the current trend is bullish, the stock may enter a consolidation phase after a sustained run-up, especially if macroeconomic conditions change or if the overbought conditions lead to a more significant correction.
Overall, this chart suggests a continuation of the bullish trend in the short to medium term, with the potential for a minor correction or consolidation in the near future due to overbought conditions. A break above 10.50 could trigger further upside, while a decline below 9.35 would warrant caution.
Haleon Plc (HLN) Technical Analysis (weekly)
This weekly chart of Haleon stock shows a strong upward trend that began around mid-2024, with the stock price recently reaching a new high of 10.32. The stock has broken out of a prolonged period of consolidation, where it traded in a range between approximately 8.00 and 9.50 for most of 2023 and early 2024. The current price action suggests a continuation of the uptrend as it moves above the upper resistance of the consolidation range.
The Anchored Volume Weighted Average Price (VWAP) is at 8.44, which serves as an important support level. This level coincides with the lower end of the previous consolidation range, making 8.44 a significant support level. A stronger support is around 9.00, where the stock had spent considerable time trading before the recent breakout.
The On-Balance Volume (OBV) has been trending upward and is currently at 104.85M, reflecting increasing buying pressure over time. This aligns with the recent price breakout and suggests that the uptrend has strong volume backing, supporting further upside potential.
Resistance is currently undefined due to the stock trading at all-time highs. However, psychological resistance may appear around the 11.00 mark, another round number and potential target for traders.
Time-Frame Signals:
1 year: Buy – The recent breakout from the consolidation range, supported by rising volume and an upward-trending OBV, indicates continued bullish momentum over the next year.
2 year: Hold – While the trend is currently positive, extended periods of consolidation could occur, especially after sharp uptrends. Holding is suggested to allow the trend to fully develop.
3 year: Hold – The long-term outlook remains optimistic, but the stock may experience periods of consolidation or correction over such an extended time frame.
This chart indicates a strong continuation of the bullish trend in the near term, supported by volume and a breakout above key resistance levels. However, caution is advised as markets can be unpredictable, and the potential for a pullback or consolidation after strong gains remains.
Past performance is not an indication of future results. This analysis should not be considered investment advice. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions. 🧡
Haleon Stock Frequently Asked Questions
1. Why is the over-the-counter (OTC) medicine business thriving amid a slowing economy?
The OTC medicine business is thriving due to the focus on essential health categories and high-margin brands, which remain resilient even during economic uncertainties. Additionally, companies like Haleon benefit from strong brand portfolios and favorable market trends such as preventive medicine and an aging population.
2. What is Haleon PLC, and why is it performing well?
Haleon PLC is the OTC business division of GSK, which was spun off in 2022. It has been performing exceptionally well, with its stock up around 40% since the demerger, due to its strong portfolio of “power brands” like Sensodyne, Advil, and Centrum, which generate 60% of its sales.
3. What factors contribute to Haleon’s market resilience?
Haleon’s market resilience is driven by its focus on high-margin, essential health brands, reduced litigation risks, and the ability to capitalize on market trends such as the growth of the OTC sector and preventive medicine. Additionally, it benefits from cost-of-living trends and investor rotation in times of economic slowdown.
4. How does Haleon’s trading multiple compare to its peers?
Haleon trades at a higher multiple than its peers due to its strong brand strength, strategic positioning, and reduced litigation risks. This premium valuation reflects investor confidence in its ability to sustain growth and capitalize on favorable market trends.
5. What are the expected growth and dividends for Haleon?
Haleon is expected to achieve high-single-digit profit growth and currently offers a dividend yield of 1.54%. These expectations are based on its strategic focus on high-margin brands and favorable market dynamics in the OTC sector.
6. What are the key trends that benefit Haleon?
Key trends that benefit Haleon include the growth of the OTC medicine market, increased focus on preventive medicine, and an aging population. These trends support Haleon’s strategic focus on essential health brands and its ability to maintain profitability amid economic slowdowns.
7. What potential risks could impact Haleon’s future profitability?
Potential risks to Haleon’s future profitability include potential litigation risks or regulatory changes impacting the OTC sector. These factors could affect the company’s ability to maintain its current growth trajectory and market position.
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