A pair of promising vaccine reports may have some Teladoc (NYSE:TDOC) investors feeling flu-like symptoms. But could one person’s misery be another investor’s even better opportunity to buy? Let’s examine what’s happening off and on the price chart of Teladoc stock, then offer a risk-adjusted prescription for purchasing shares more smartly.
The past two weeks have seen Wall Street full of relief-felt cheer with wallets stretched open at the start of each workweek. And it’s easy to appreciate. Last Monday it was Pfizer (NYSE:PFE). And at this week’s open, peer Moderna (NASDAQ:MRNA) air-lifted the major averages for a second time.
Inciting the risk-on environment, both drug manufacturers vaccines for Covid-19 have shown dazzling efficacy against the disease. It’s the type of news that’s made a very even-keeled and cautious-to-a-point Dr. Fauci, approvingly excited.
But in a market made up of stocks and some companies doing quite well on the back of the pandemic, TDOC stock has suffered. Simply put, lockdowns, stay-at-home orders, and a strained health community busy fighting the Covid-19 pandemic allowed Teladoc, a virtual healthcare services outfit, to become an overnight growth stock sensation and necessity to the population at large in 2020.
In Sickness and in Health
Teladoc’s rise to prominence isn’t unlike Zoom Video (NASDAQ:ZM) or Peloton (NASDAQ:PTON) for that matter. Each outfit, in their own unique way, offers a digital channel for keeping on top of one’s health during this year’s socially distanced normal. And similar to ZM and PTON, TDOC took Pfizer’s and Moderna’s news very personally.
But is the light at the end of the tunnel for Covid-19 really the end of the road for Teladoc and its growth narrative?
InvestorPlace’s Louis Navellier doesn’t see it that way. He’s particularly upbeat after the company’s acquisition of $18.5 billion of applied health signals specialist Livongo. For better or worse, or more aptly in sickness and in health, Teladoc is positioned to provide incredibly comprehensive end-to-end remote healthcare and continue to grow its business longer-term in an emerging secular trend within the healthcare market.
TDOC Stock Monthly Price Chart
Source: Charts by TradingView
Since early August, shares of Teladoc have been in a correction. At its weakest, just over a week ago, the price action worked its way into a decline of 33%. That’s a significant contraction in TDOC stock’s valuation. It’s also quite common for a growth stock of Teladoc’s caliber and should benefit tomorrow’s investors who welcome the price action as an opportunity to buy growth at a compelling discount.
The thing is, even the most dearly held and established companies like Apple (NASDAQ:AAPL) or Disney (NYSE:DIS) will lose their way at times with investors. And the “why’s” during the heat of the moment rarely hold water over time. Don’t believe me? A definite victim of Covid-19, shares of DIS have just finished retracing their entire bear market plunge tied to the pandemic.
Yes, life goes on. And for Teladoc, shares should be much closer to regaining favor with Wall Street than not. Having said that my recommendation today would be to monitor Teladoc’s monthly chart for a flattening of its stochastics indicator in conjunction with a confirmed weekly candlestick reversal pattern before making a buy decision.
Bottom-line, there’s no need to catch a falling scalpel on Teladoc’s price chart. And when a modest bit of technical confirmation does arrive, a flexible stock collar strategy to navigate the healthiest and worst of times sure to follow, is an even stronger Rx for purchasing TDOC stock smartly.
On the date of publication, Chris Tyler did not hold, directly or indirectly, positions in any of the securities mentioned in this article.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. The information offered is based on his professional experience but strictly intended for educational purposes only. Any use of this information is 100% the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.