Earlier this year, healthcare was a Wall Street darling.
In September, though, it started to take a back seat to tech, consumer staples and financials.
But now several stocks in the healthcare group are looking like great buys.
Here are four such bullish plays, identified by the Profit Scanner powered by Recognia in its nightly scan of more than 65,000 trading instruments.
Bullish Healthcare Plays: RadNet Inc. (RDNT)
First up is RadNet Inc. (RDNT), which operates centers for diagnostic imaging, including X-rays, MRI, CT and PET.
On Oct. 28, RadNet completed a rare but very bullish chart pattern: The Megaphone Bottom.
As you can see on RDNT’s chart, the pattern is very jagged as the stock trades out of control.
There are three lower lows, with two higher highs in between…and when the stock breaks above that second peak, that indicates a more decisive bullish move.
Click to Enlarge There are three lower lows, with two higher highs in between…and when the stock breaks above that second peak, that indicates a more decisive bullish move.
Based on the Megaphone Bottom, the Profit Scanner expects RadNet to reach $7.60–$7.90 in the next 43 trading days. So, we’re looking at about 15%-20% further upside in the intermediate term.
A few other indicators are looking bullish as well. RDNT’s Commodity Channel Index turned short-term bullish on Oct. 28, and the stock recently overtook both its 50-day and 21-day moving averages.
Bullish Healthcare Plays: LHC Group, Inc. (LHCG)
LHC Group, Inc. (LHCG) is a provider of post-acute care services, such as home nursing.
Its stock had a tough time for much of October, but things are starting to look up.
On Oct. 27, LHCG signaled that bulls are starting to regain power, in the form of a bullish Inside Bar. It emerges during a downtrend, and consists of a trading range that’s completely within the boundaries of the prior bar.
Click to Enlarge Basically, things seem to be settling down.
Then, on Oct. 28, LHCG had a bullish Outside Bar. That day, selling definitely seemed to have reached exhaustion, and the bar completely enveloped the prior bar … which could be a key reversal.
You can see both bars on this chart. Neither carries a specific price target, but they amount to short-term bullish signals for LHCG stock.
Bullish Healthcare Plays: Universal Health Services, Inc. (UHS)
Hospital operator Universal Health Services, Inc. (UHS) enjoyed a similar signal on Oct. 28: the bullish Engulfing Line.
Here, the stock makes a white candlestick that completely overtakes the black candlestick before it … a sign that buying pressure has finally overwhelmed previous selling pressure.
Click to Enlarge It’s a very short-term bullish signal: good for about five trading days.
The stock’s Williams %R indicator turned short-term bullish on Oct. 28 as well. That’s further evidence that UHS has recovered from its oversold state.
Bullish Healthcare Plays: ZIOPHARM Oncology Inc. (ZIOP)
ZIOPHARM Oncology Inc. (ZIOP), too, looks to be reversing higher.
The biotech had a strong intermediate-term signal on Oct. 27: a bullish Symmetrical Continuation Triangle.
With this pattern, you see two converging trendlines as the stock makes lower highs and higher lows. Before the “triangle” can reach its apex, the stock then breaks above the upper trendline — a sign that the prior uptrend will continue.
Click to Enlarge
Based on the bullish Symmetrical Continuation Triangle, the Profit Scanner expects 27%–35% further upside in the next 26 trading days, to the $15.20–$16.10 area.
ZIOP also carries a longer-term target range of $17.25–$18.75, for those who prefer to look a bit further afield.
Profit Scanner powered by Recognia can help traders of all levels uncover these signals to determine the best timing to buy. Or use Profit Scanner’s technical insight to validate your own trading ideas. See how easy this powerful tool is to help you uncover hidden opportunities in the market.