It’s important stuff for many of our other four-legged family members. And this year with Zomedica (NYSEAMERICAN:ZOM) rocketing smartly higher, is ZOM stock worthy of a home in your portfolio? Let’s see what’s happening off and on the price chart of Zomedica, then offer a well-aligned risk-adjusted determination.
Bow wow! After debuting in mid-2017 and hitting an all-time-high of $2.98 about a year later, ZOM stock rolled over and all but played dead for its shareholders. The stock hit a delisting-worthy 6 cents a share as recently as November 2020.
But this dogged stock has learned a new trick in 2021.
ZOM is up 725% since the start of the year. And that’s after a pullback that began nearly a month ago and still barely three months into 2021! In February, the gain was as much as 1,165%. Bulls but not pigs, right? Actually, and before you go decide ZOM’s best days are behind it, there are growing reasons to see and believe otherwise.
Behind the sudden excitement in Zomedica is a nearby game-changing product that’s already providing sustainable changes for ZOM stock. At the end of March, the veterinary diagnostic company will begin a limited rollout of what’s called Truforma. Truforma will be the first marketed point-of-care diagnostic platform capable of testing for thyroid and adrenal-related health issues in dogs and cats.
Not only is this good news for our pets well-being and pet owners wallets as less timely and more costly off-site lab results get the boot, the size of this market points toward a significant sales boon for Zomedica. And with that come incredibly good things for ZOM stock.
How Good for ZOM Stock?
Assigning a reasonable 15x sales multiple and 10% of the market, InvestorPlace’s Mark Hake recently laid out the case of ZOM fetching as much as $3.61 per share. And Mark’s not alone in his conservative, if not upbeat appraisal of ZOM either. Colleague and growth-hungry Louis Navellier sees Zomedica as an interesting play which could power its way to new highs this year on the back of potential profitability.
And there’s more to be upbeat about right now in ZOM stock, too.
Prudent action by management to capitalize on Zomedica’s influencer-driven rally with a secondary offering have put the company in a healthy position to get Truforma into the market without worrying about paying the bills.
The infusion of more than $170 million from the recent offering lifted ZOM’s net cash position to more than $275 million. And with today’s war chest roughly three times what the company estimates for day-to-day operations through 2023 when ZOM stock should turn cash flow positive, that’s great news indeed.
ZOM Weekly Price Chart
Source: Charts by TradingView
This year’s most confident animal spirits hoisted ZOM stock within whisker distance from a new all-time-high. Nearly a month removed from February’s excitable peak, a healthy correction has set up a nice-looking weekly chart entry.
Technically and two sessions into a new trading week, ZOM stock is showing solid signs of bottoming in a handle consolidation pattern. The formation has found support off the 50% retracement level and is currently shaping a second-straight inside candlestick within the bullish pullback. With Zomedica’s weekly stochastics in neutral territory, a purchase of shares looks close at hand.
Today, I’d suggest waiting to buy ZOM if shares can reclaim $2.25 and see a flattening out or ideally, a bullish crossover from its stochastics indicator. An entry above $2.25 is simply the high from last week’s inside candle and offers an early entry with increased confidence of a bullish resolution out of the handle. An eventual breakout from the consolidation which lines up nicely with the larger cup base and Zomedica’s all-time-high could be used as a spot to add exposure to the stock.
Using ZOM’s price chart as our guide, there’s about $1 of initial downside risk for this particular buy decision. Admittedly, it’s a lot to swallow for such a low-priced stock. But volatility is a two-way street. Also, it’s a price feature which has already worked very favorably for bullish ZOM stock investors. Moreover, the purchase and assumed risk is well-supported by a conservative measured move out of the cup which could land Zomedica shares in-between $5 to $6 in the next 12 to 18 months.
On the date of publication, Chris Tyler does not hold, directly or indirectly, any positions in 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.