Today's IBD 50 Stocks to Watch includes a new name to the IBD 50. It's not surprising to see a health care stock being added to the IBD 50, because that's been a leading sector. Option Care Health is a forming a base. Earnings are in two weeks, so heed caution if buying into earnings.
Option Care Health specializes in intravenous infusion therapy for a wide range of serious, acute and chronic conditions. Those include infections, chronic inflammatory diseases, neurological disorders, bleeding disorders and heart failure.
The company treats over 225,000 patients per year at home or one of its 125 infusion centers. Option Care works through a network of pharmacies and partners with hospitals and other health care providers including nurses, pharmacists and dietitians. Over 800 insurance plans cover those services.
Health Care Stock Shows Growth
Option Care Health is ranked No. 1 in the medical services industry group, which is ranked No. 89 out of the 197 industries IBD tracks.
Although the EPS Rating is 76, lower than the CAN SLIM target of 80, it has shown sharp improvement in earnings the past several quarters. In the first quarter, it earned 17 cents a share vs. a year-ago loss of 2 cents a share.
The company scheduled Q2 earnings for July 27, with Wall Street analysts expecting EPS of 23 cents versus 18 cents a year earlier. The company has the capability for an earnings surprise, as it produced EPS surprises of 29.4% and 65.9% in the last two quarters, according to FactSet.
Most Trusted Financial Companies — Take A Survey And Win A $50 Amazon Gift Card
Analysts are looking for annual 22% earnings-per-share growth in 2022 and 24% in 2023. Quarterly sales have grown between 14% and 21% the last three quarters.
Fund ownership is high, with 55% of the stock in the hands of mutual funds. And the number of funds owning the stock is increasing, from 558 funds in June to 537 in March and 519 in December. This is reinforced by the Accumulation-Distribution Rating of B. This metric tracks the relative degree of institutional buying (accumulation) and selling (distribution) over the last 13 weeks.
Option Care holds a 97 out of 99 Composite Rating, which combines five proprietary SmartSelect Ratings, weighted more heavily on EPS Rating and Relative Strength Rating.
Stock Forming Cup With Buy Point
Option Care Health stock is forming a cup base with a 31.18 buy point on the MarketSmith chart. The stock saw lows in mid-June but surged 5.5% on June 24 on the heaviest volume since forming a base, a positive sign. Shares are above both the 21-day exponential moving average and the 50-day moving average.
The relative strength line is at new highs, indicated with the blue dot on the MarketSmith weekly chart, which is another positive sign.
Investors should be aware the stock market is still under pressure as gauged by IBD, so buying stocks requires more care than usual.
