What to Buy: CYH
Courtesy of David at The Oxen Group
For Tuesday, The Oxen Group is looking at what may be a down day. A lot of earnings that came in after hours were weak and there was not any news to propel the market. Tomorrow, consumer confidence report, as well as, earnings from a number of companies will definitely be important, but this market looks like it is ready to take profits. For the first time in a long time, overnight futures for the market are down. Even the consumer confidence report may not have enough steam to really propel the market.
So, trying to find those green stocks may be more difficult tomorrow. One sector that The Oxen Group likes is hospitals. In after hours, the hospital service company Health Management Associates Inc. (HMA) reported earnings with a profit jump of 91% from one year ago, sales increase of 4.5%, and beating EPS estimates by 0.03. The stock got a nice 6% boost in after hours. HMA may be a tough play as it will probably jump up early and trade rather sideways to downwards as investors take profits.
However, Community Health Systems Inc. (CHY) may also be a beneficiary of this news. The company, which is a hospital service operator that operates the same acute care facilities as HMA should get a boost from the earnings report. The company is reporting earnings this Thursday, and if it is anything similar to HMA, then it will be very good for the company. Investors may send it up tomorrow and price in earnings now that they saw HMA’s. The stock has potential upside after it pulled back recently from a downgrade. We may need to get out early, though if the market moves red.
Entry: Recommend buying in first 5-20 minutes
Exit: We recommend exiting after a 2-4% increase.
Stop Loss: We recommend a 3% stop loss on all buy in prices Upper Resistance: 30.00
