What Stocks To Buy In This Slow Growth Economy

In this slow growth environment, you want to focus on companies that can deliver the growth and that don’t need the economy to do well.

We track more than 110 stocks currently on GuerillaStockTrading that are part of our watch list. It is a broad and diverse group of stocks that are small cap, mid cap, large cap, and mega cap. We track earnings and revenue reports and all news for these stocks. A pattern has emerged this earnings season that you need to know about.
Continue reading “What Stocks To Buy In This Slow Growth Economy”

IBM Retracement Setup After Earnings and Revenue Beats

International Business Machines Corporation (IBM) stock looks like a good setup after the stock has done a 50% Fibonacci retracement.

On Tuesday, October 17, 2017, IBM reported EPS of $3.30 versus the consensus estimate of $3.28. Revenue also beat coming in at $19.15 billion versus the estimate of $18.63 billion.
Continue reading “IBM Retracement Setup After Earnings and Revenue Beats”

Top Large Cap Growth ETF iShares Core US Growth ETF

The top large cap growth ETF to trade right now is the iShares Core S&P US Growth ETF IUSG. This ETF tracks the S&P 900 Growth Index which measures growing companies using three factors: sales rate of increase, the ratio of earnings change to price, and momentum.

Large Cap Growth ETF iShares

The top 10 holdings in IUSG as of July 10, 2017 are:

Apple Inc = Information Technology
Microsoft Corp = Information Technology
Amazon = Consumer Discretionary
Facebook Inc = Information Technology
Alphabet Inc = Information Technology
Alphabet Inc C = Information Technology
Johnson & Johnson = Health Care
Comcast Corp = Consumer Discretionary
Home Depot Inc = Consumer Discretionary
Unitedhealth Group Inc = Health Care

Large Cap Growth ETF iShares Chart

IUSG is a good long setup opportunity. The chart has both a pocket pivot and positive divergence on the Effective Volume large players indicator. Prices have been consolidating lately and the volatility has been reduced setting up a momentum squeeze.

The True Strength Index on the Large Cap Growth ETF iShares IUSG has yet to do a bullish cross so some caution is warranted. There is a resistance zone just above the current price starting at 48.55. Right above this resistance zone may be a good entry point. There is a support zone below the current price at 48.31, a stop order could be placed below this zone.

GO HERE TO SCREEN FOR LARGE PLAYERS, POCKET PIVOTS, AND MOMENTUM SQUEEZES LIKE THE CHART ABOVE… AWESOME TOOL

PRA Health Sciences On Momentum Squeeze

The stock of PRA Health Sciences looks like a compelling entry on a momentum squeeze after the company announced a partnership with Jumo.

PRA Health recently announced a partnership with Jumo, a global provider of educational health care information. The company says that PRA Health can leverage on Jumo’s solid education-information system to bridge the gap between caregivers and patients while conducting pediatric clinical trials.

PRA Health Sciences Stock Chart

Large players have been selling the stock so I think you have to be cautious before taking a swing long entry. We have had several Pocket Pivot signals (blue dots) which is a bullish sign.

There is reduced volatility while prices have been consolidating setting up a momentum squeeze.

There is a very little resistance above the current price.

GO HERE TO CHART LARGE PLAYERS AND THE TWIGGS MONEY FLOW LIKE THE CHART ABOVE… AWESOME TOOL

Cerner Corporation Momentum Squeeze On Awesome Revenue Growth

The stock chart of Cerner Corporation shows a momentum squeeze candidate on excellent sales growth and new business from the Carolinas HealthCare System (CHS).

Cerner announced on June 21, 2017, that the Carolinas HealthCare System (CHS) has selected Cerner’s HealtheIntent public health management platform to organize and manage care for its more than 12 million individual interactions every year across its facilities and clinically integrated network, Carolinas Physician Alliance (CPA).

HealtheIntent is intended to aggregate data in real-time from several sources to produce a single, comprehensive view of someone’s experiences throughout the continuum of health and care.

The objective is to equip medical professionals with a holistic and timely picture of a patient’s connections through CHS, in addition to provide system wide insights to ultimately improve quality of care and reduce costs for the entire CHS patient population.

Cerner Corporation Stock Chart

CERN presents a good setup pattern. Prices have been consolidating lately and a momentum squeeze has formed on the chart.

There is a resistance zone just above the current price starting at 68.32. Right above this resistance zone may be a good entry point in Cerner Corporation. There is a support zone below the current price at 67.04, a stop order could be placed below this zone.

GO HERE TO CHART LARGE PLAYERS AND THE TWIGGS MONEY FLOW LIKE THE CHART ABOVE… AWESOME TOOL

Centene Gets S&P Rating Upgrade to BB+ from BB

May 18, 2017: S&P raises Centene’s rating one notch to BB+ from BB with an outlook rating of stable. “The rating upgrade on Centene reflects the company’s continued successful execution of its growth and profitability initiatives since we assigned a positive outlook two years ago (in May 2015)”, said Julie Herman, S&P Global credit rating analyst. Herman continued, “As a result, we believe Centene has increasingly differentiated itself favorably from its closest peers Wellcare and Molina, both of which we rate BB/Stable.”

The stable outlook on Centene reflects our expectation that the company will maintain its strong competitive position in the managed Medicaid market while continuing to diversify its profile, particularly in Medicare and specialty services. Consistent with our base-case economic forecast, we expect the company to show revenue growth of 5%-15% over the next two years, with an EBIT ROR of about 2.5%-3.5%. We expect financial leverage to remain elevated but to continue to drop year over year, reaching below 40% over the next two years. We expect consolidated GAAP capitalization to improve year over year through earnings growth, but remain modestly deficient at ‘BBB’ over the next two years. However, we expect consolidated risk-based capital levels to remain around 350%.

April 25, 2017: Centene reports Q1 EPS of $1.12 adj versus the $1.06 estimate. Revenue also beat coming in at $11.7 billion versus the $11.4 billion estimate. Quarter-end at-risk managed care membership came in at 12.1 million or +5% YoY.

February 7, 2017: Centene reports Q4 EPS of $1.19 versus the $1.12 estimate. Revenue also beat coming in at $11.9 billion versus the $10.9 billion estimate. Quarter-end at-risk managed care membership came in at 11.44 million versus 5.1 million last year representing an increase of 223% YoY, nice!

January 5, 2017: Centene Corporation announced today that its Pennsylvania subsidiary, Pennsylvania Health & Wellness, has been selected by the Pennsylvania Department of Human Services to serve Medicaid recipients enrolled in the HealthChoices program in three zones. Pending regulatory approval and successful completion of readiness review, the three-year agreement is expected to commence June 1, 2017. In April, Centene was originally selected to provide services in three zones for HealthChoices. Today’s award is in response to a re-issue of the HealthChoices award.

The Department completed an evaluation and scoring of the proposal and has selected Centene’s proposal for the Southeast Zone, the Southwest Zone, and the Lehigh Capital Zone of Pennsylvania. The HealthChoices program covers low-income children and families, individuals with disabilities, as well as those newly eligible under the Affordable Care Act expansion throughout the state of Pennsylvania.

In addition to the Health Choices Medicaid award, Centene was previously selected under a separate contract by the departments of Human Services and Aging to serve enrollees in the Community HealthChoices program statewide, pending regulatory approval and successful completion of readiness review. Under this agreement, Pennsylvania Health & Wellness will coordinate physical health and long-term services and supports (LTSS), if needed, to enhance the quality of medical care and access to all appropriate services to more than 420,000 individuals who are dually eligible for Medicare and Medicaid, older Pennsylvanians and individuals with disabilities.

January 3, 2017: Piper Jaffray/Simmons initiates coverage of Centene Corporation with an Overweight rating, and sets a price target of $67.

December 20, 2016: JPMorgan Chase and Co initiates coverage of Centene Corporation with an Overweight rating, and sets a price target of $75. JPMorgan also added Centene to its Analyst Focus List saying that while Republican “repeal/replace” efforts present some risk to both the Medicaid RPF pipeline and current Obamacare-population earnings, they believe the current valuation is more than discounting that risk.

Centene Corporation, a Fortune 500 company, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government-sponsored healthcare programs, focusing on under-insured and uninsured individuals.

Many receive benefits provided under Medicaid, including the State Children’s Health Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD), Foster Care and Long Term Care (LTC), in addition to other state-sponsored/hybrid programs and Medicare (Special Needs Plans). The Company operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health management, care management software, correctional healthcare services, dental benefits management, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.

Sell Exact Sciences For a 55% Win!

March 4, 2017: Sell Exact Sciences for a 55% win in 37 days. Congratulations if you were able to make money on the trade and always remember to sell your positions before you get the sell alert from me. I review more than 200 open stock positions over the weekend when I have time and so my sell signals are always going to come later.

March 2, 2017: A study from Exact Sciences Corp. and Mayo Clinic released today by the American Association of Cancer Research (AACR) shows promise for the development of a blood-based lung cancer test. Researchers conducted a multi-round study of nearly 400 patients, which demonstrated high accuracy for detecting lung cancer at all stages.

AACR released an abstract of the study today, ahead of the presentation of the results on April 2, 2017, during the AACR 2017 annual meeting. The findings from the study of 398 patients (311 controls and 87 cancers) demonstrate that biomarkers in plasma achieved high accuracy for all types and stages of lung cancer. Using two independent regression modeling approaches, a panel of four novel methylated DNA markers demonstrated a sensitivity of 91-96 percent at a specificity of 90-94 percent.

More studies are needed to corroborate accuracy, however, this plasma DNA test approach appears to be a promising new method and may serve as a rational follow-up to the common findings of lung nodules on CT scanning and may have application in screening for lung cancer.

February 21, 2017: Roth Capital raised Exact Sciences to Buy from Neutral and set a price target of $26. The price target was raised to $26 from $15. Roth Capital says Exact Sciences announced Q4 revenues in-line with its pre-announcement beat driven by strong volumes and higher ASPs, and unveiled 2017 guidance above expectations.

February 5, 2017: On February 2, 2017, Exact Sciences announced that Cologuard® is included in the Medicare Advantage Advance Notice and Draft Call letter. Cologuard’s inclusion in the final Star Ratings will allow Medicare Advantage plans to increase their Star Rating when patients complete Exact Sciences’ non-invasive colon cancer screening test.

Kevin Conroy, chairman and CEO of Exact Sciences said, “The proposed inclusion of Cologuard in the Star Ratings program is an important step toward it becoming a standard of care for colon cancer screening. Health insurers would be eligible to receive Medicare Advantage Star Rating quality credit when their members are screened using Cologuard.”

The Centers for Medicare and Medicaid Services (CMS) Medicare Advantage Star Ratings are directly impacted by the Healthcare Effectiveness Data and Information Set (HEDIS). The HEDIS quality measures were updated by the National Committee for Quality Assurance (NCQA) on October 3, 2016, to include Cologuard on an every three-year screening schedule. CMS’s proposal to broaden the colorectal cancer screening quality measure is subject to a 60-day public comment period. The proposal aligns the Star Ratings with the HEDIS quality ratings and the colorectal cancer screening guidelines of the U.S. Preventive Services Task Force, the American Cancer Society and others. Just as HEDIS 2017 quality measures are used to audit and report the 2016 performance of providers and health systems, the Stars Ratings use the HEDIS data to calculate the quality performance of Medicare Advantage plans.

January 8, 2017: Exact Sciences guides Q4 revenue from $34.9 million to $35.4 million versus the $29.5 million estimate. Q4 saw the completion of approximately 82,000 Cologuard tests during the fourth quarter of 2016, which represents growth of 114 percent from the same period of 2015.

More than 9,500 health care providers ordered Cologuard for the first time during the fourth quarter ended Dec. 31, 2016. The number of providers who have ordered Cologuard since it was launched increased to nearly 60,000 during 2016, an increase of 122 percent from the prior year.

Insurance coverage of Cologuard expanded by 67 percent during 2016. Coverage has increased by 62 million lives since June 2016, when Cologuard was included in the U.S. Preventive Services Task Force’s final colorectal cancer screening recommendations. More than 163 million people are in health plans that cover Cologuard as of January 6, 2017.

January 5, 2017: Exact Sciences announced that the Blue Cross Blue Shield Association’s (BCBSA) Center for Clinical Effectiveness “Evidence Street” recently released a positive review of Cologuard to its members. BCBSA is a national federation of 36 Blue Cross and Blue Shield companies that insure one in three Americans. This continues the positive momentum for Cologuard, as coverage increased by 67 percent in 2016 and nearly 163 million Americans are now in health plans that cover the non-invasive colorectal cancer screening option. The BCBSA’s Center for Clinical Effectiveness is an organization that assesses the effectiveness of medical devices, procedures, and biological products through comprehensive reviews and clinical evidence. The Evidence Street assessment follows other positive reviews of Cologuard, which is now included in the recommendations of the U.S. Preventive Services Task Force, and the colorectal cancer screening guidelines of the American Cancer Society and the National Comprehensive Cancer Network. This assessment is influential for association members and non-members who look to the Center for Clinical Effectiveness for guidance. BCBSA does not endorse specific companies or products nor make coverage decisions.

December 12, 2016: Exact Sciences announced today under a recently-signed contract, Humana Inc. agreed to cover Cologuard as an in-network service for its members, effective January 1, 2017. Under terms of the agreement, Cologuard will be available to most Humana beneficiaries with no co-pay. Humana covers nearly 10 million recipients and is the nation’s fifth-largest commercial insurer.

With Humana’s inclusion of Cologuard as an in-network service, the test is now covered by a cross-section of health plans nationwide with more than 153 million members. This is an increase of more than 50 million members since June 2016 when Cologuard was included as an A-rated service in the colorectal cancer screening guidelines of the U.S. Preventive Services Task Force. More than 68 percent of Cologuard’s addressable population are enrolled in plans that cover the test.

Exact Sciences Corp. is a molecular diagnostics company focused on colorectal cancer. The company has exclusive intellectual property protecting its non-invasive, molecular screening technology for the detection of colorectal cancer. Stool-based DNA technology is included in the colorectal cancer screening guidelines of the American Cancer Society and the U.S. Multi-Society Task Force on Colorectal Cancer.

Medical Device Markets To Benefit From Big VA IoT Push

The Department of Veterans Affairs is on the cutting edge of IoT medical devices. This is great news for medical device stocks and more specifically telehealth companies like Koninklijke Philips (PHG), Teladoc (TDOC), Medtronic (MDT), and more.

Below is Susan Perez with the Department of Veterans Affairs talking about how IoT and medical devices a patient can have at home that sends vital statistics to that patients doctors are the future of healthcare.

FEF Internet of Things Profiles VA Feb 2017

Biotechnology Won Big On Election Night Here’s Why

Hillary Clinton and Democrats promised to wage war on pharmaceutical companies and do things like price controls on drugs and products of the biotechnology industry.

In California, there was a ballot measure to impose price controls on the sale of pharmaceutical drugs in the state.

Both Hillary Clinton’s probability of winning, and California’s ballot measure to impose price controls on the sale of drugs, weighed on pharmaceutical and biotechnology stocks leading up to the election.

Donald Trump did not promise a war on pharma. Trump promised increased funding for research and development and modernizing the FDA to ease the development, commercialization, and costs of bringing life-saving drugs to market.

Donald Trump won, and biotech stocks have been rallying ever since.

Democrats created shortages in the health care industry with ObamaCare, and they almost created the same shortages in pharmaceutical drugs. Let’s look at why price controls create market shortages.

Price Control

A price control (or a price ceiling) occurs when the government puts a legal limit on how high the price of a product can be. For a price control to be effective, it must be set below the natural market equilibrium.

Using a hypothetical perfectly competitive market called pharmaceutical drugs, let’s examine the microeconomics of price control.

When a price control or price ceiling is set, a shortage occurs. The red horizontal line markets the price ceiling that is set by the government.

The price control forces the price down from P to P2. At the lower price, more people can afford the drug and so the quantity of the drug demanded goes up from Q to Q2 (point A).

The suppliers of the drug (pharmaceutical company) immediately cut back on supply (point B) as they are now paid below what the equilibrium market price established. Instead, these suppliers focus on supplying most of their drugs to other consumers, perhaps in other states that pay the full market price for the drugs they make. A shortage is created by the difference in the quantities of drugs demanded, versus the quantities of drugs supplied as illustrated by the shaded area. Shortages within the pharmaceutical industry would likely result in deaths, depending on the drugs needed.

The government set a price ceiling of P2 and so quantity supplied contracted to point B. However, at that supply level, consumers would be willing to pay a price of P3. Since P3 is greater than P2, deadweight loss occurs. The deadweight loss is the elimination of trading between both suppliers and consumers.

Price controls are a bad idea. If the government sets a price ceiling, there will be a shortage.

Here Comes Inflation FINALLY! Traders Focus On Earnings

We have enough data to say that inflation is finally trending higher.

In case you are wondering why inflation moving higher is important, please review this.

The less volatile sticky CPI confirms the uptrend.

ObamaCare has exploded the cost of medical care higher.

Medical care commodities, which are prescription and non-prescription medications, have exploded higher.

Inflation is finally trending higher which is what the Federal Reserve has been trying to engineer for years through monetary policy. The WSJ writes

Fed Chairwoman Janet Yellen herself said last week that letting the economy run hot for a while might have some benefits… None of this is enough to take a rate increase at the Fed’s December meeting off the table. But it does mean that, even as prices pick up, further rate increases will be slow to come. Investors accustomed to inflation running below the Fed’s target may be in for some retraining.

Folks, this is another reason why we need to start getting more bullish on the stock market as we head into November and the start of the best six months of the year. Remember, a big part of the bearish scenario was a slowing US economy pressured downward by deflation as a result of Saudi Arabia destroying our shale oil industry. Lots of good jobs were lost and replaced by lower paying service sector ones as a massive wave of disinflation hit our economy. The latest inflation numbers suggest that the worst is behind us as the price of oil is in a slow fade upward, and more oil rigs are brought back online as evidenced by the upward trend on the weekly Baker Huges rig count.

All traders are watching this earnings season closely to see if the falling earnings streak is over. That’s the confirmation data point that is needed. In an inflationary environment, businesses are raising prices to keep up with the growing demand from a strengthening consumer. Traders want confirmation that the inflation we are now seeing is signaling a bottom in the earnings recession we have been in since Q1 of 2015.