|This Trade Was Closed March 20, 2012|
I should update this trade because the stop sell was triggered. That was a disappointment. CYH went from doing relatively better than the market – to relatively worse – in a very short time. A bit peculiar with such a 180 degree turn-around but okay – this idea didn’t work out apparently.
Peers to CYH started to turn in the same down direction as well but not in the same speed. The percentage movement today, and a large number of Put/Call volume on short-term options today are suggesting to me to not to try and get back into the trade at the lower price. Moving this stock to the inactive list for the time being.
Original Trade Post:
I am up for trying to go long on CYH after some days of breathing.
They had a reasonably good earnings report. The price shot up and seems to have found a level of support now around mid $23.
What I like here is a reasonably low valuation, increasing revenue, profitable and the health care sector as a whole.
The company has a high debt ratio but a reasonably healthy current ratio. If we believe the numbers it is trading below book value (I have not checked the numbers yet but I assume its mostly tangible asserts).
The company does not pay a dividend.
Looking for a $25 target and if it goes there I will see how it fares in comparison to peers and the broad market. I will definitely re-evaluate if this long trade is a mistake if it does not bounce up at around $22.70 (26 day EMA).
I consider long CYH a medium risk trade – because of the longer term downtrend – with the recent surge not having proved itself yet. So my position size is only 50% of what I would consider the limit on an individual stock.
- The Ticker: CYH
- The Trade: Buy at $24.01
- Target Price: $24.01
- Trade Opened: March 14, 2012
- Trade Closed: March 20, 2012
Chart courtesy Finviz. Click to open in larger window.
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