Click to EnlargeAmerisourceBergen Corp. (NYSE:ABC) is a drug distribution company that has blasted higher by nearly 40% from November until now, and then tumbled after the company’s latest earnings report, in which income was a bit softer than expected. I’m seeing the opportunity for a call options trade since ABC’s growth shows no sign of slowing.
It has consolidated a sprawling industry, offering pharmacy automation, inventory management, reimbursement and pharmaceutical consulting, staffing, logistics, and pharmacy management services to health-care providers and pharmaceutical manufacturers. It also provides automated pharmacy-dispensing equipment, medication- and supply-dispensing cabinets, and supply-management software to retail and institutional health-care providers.
There is a lot of buzz in the market that staples and health-care stocks are cooked — but when you look at ABC, you can see that buyers have come right back on this reset.
Currently the stock is near its 52-day moving average, but I think it still has some room to move up.
Recommendation: Buy ABC June $50 calls (currently trading around $4.80) for a $6.85 target.
InvestorPlace advisor Jon Markman operates the investment firm Markman Capital Insight. He also writes a daily swing trading newsletter, Trader’s Advantage, which aims to capture profits of 15% to 40% and often as much at 100% to 200% in less than 90 days.
Professional traders and hedge funds make huge profits off volatility. Now, Jon’s service CounterPoint Options levels the playing field with the first service geared towards helping individual traders make steady, consistent profits with the VIX. Get more information on Trader’s Advantage and CounterPoint Options today.