Rated buy by analysts with 20% upside
Less volatile than the market (Beta 0.89)
Sensible valuation (P/E 15.72x, P/BV 2.18x)
Healthy growth (5 yr avg revenue +10%, ROE +14%)
Has been on a downtrend since the historical top of July 2015
Long and medium term technical pictures still negative
Has retraced 53% of major move started in Dec 2011
Stock now appearing oversold (RSI<30)
Has found a temporary floor at $69.30 post disappointing
This also corresponds to the 61.8% Fib retracement ($68.87)
After sell-off on Nov 8 the stock traded up significantly on 5.5x average
PLAIN VANILLA LONG STRATEGY
Buy at the market
Stop loss $69.30
Time horizon year-end
Target 1 $81.25
Target 2 $86.00
1. Has taken its time to consolidate before consecutive breakouts;
2. Recently broken out above key 81.25 level;
3. Recent upside has been done with increasing volume;
4. Shorter-term MAs exhibiting positive behavior (crossing up).
While the stock may seem a little overbought on the shorter time frame, it is still time to increase our trade size by 20% while raising our stop-loss from $69.30 to $77.50. Next target at 86 remains valid.
I would not put new money at play into CVS before the earnings.
CVS down below support in above average volume.
This long trade is still valid above 78-79 (last close 79.49).
Stay long into earnings (Feb 9) above those levels.