HCA Holdings (HCA) — Last month, I reviewed this stock for the first time since December 2012, when I recommended shares saying the company was likely to benefit from the reelection of President Obama and the Affordable Care Act. The stock was up 85% from my initial recommendation, and has since gained another 11.5%.
Earnings are expected to increase from $3.41 per share in 2013 to $4.21 in 2014 and $4.74 next year. However, at current levels, the pace of earnings growth is not keeping up with the stock, which now looks overpriced. Shares have exceeded S&P Capital IQ’s fundamental 12-month target of $68.
When I recommended HCA on July 24, near $62, I set a trading target of $70. The stock hit a high of $69.46 on Thursday and closed at $68.99. With a good run in just over a month and HCA looking toppy — i.e., MACD negative and the stock rolling over at just shy of $70 — it is time to sell. Those who hold HCA as a long-term investment may want to continue to do so.