HCA Healthcare Is a Safe Port in a Storm
As the market rotation continues, less focus on technology and more on healthcare.
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It is hard to believe in this time of year, the most bullish in the calendar through the end of the year, that the biggest and best stocks are choking down the stretch.
Who wouldn't want to own a Magnificent 7 stock here? Microsoft (MSFT) ? Alphabet (GOOGL) ? The mighty NVIDIA (NVDA) ? No, these stocks had their shot earlier in the year and now it is time for them to take a backseat to the new drivers of performance: healthcare!
Markets are under some duress now, traders/investors need to find safe harbor.
Yes, these stocks that promise big and deliver more are going to be your next $1 trillion market cap companies. OK, maybe that's a stretch, but there's reason to believe companies like Lilly (LLY) , Merck (MRK) and Pfizer (PFE) will keep leading.
But another name that has curiously been resilient during recent good times and bad is HCA Healthcare (HCA) . That's right, a hospital!
Believe it or not, HCA is making all-time highs and leaving the technology, retail, industrial and discretionary names in the dust. Even precious metals and homebuilders are struggling now to keep up with healthcare. We see good opportunity for an options trade.
The chart is strong and overbought in the $470s, but HCA can live overbought for some time, as the RSI remains strong. The $500 target is not far off, and while it might be right to wait for a lower entry point we could put down a medium-term trade to ride the current momentum wave. That target is only 6% away, we can buy a March 2026 500 call (see below) for about $23.50 dollars, or 4.7% the price of the stock. The expected move is about $30.
This would include and earnings report, where the stock often moves sharply. If the current momentum carries the stock to $500 by January, the option could already be worth roughly 70% higher than current price (depending on when that rally would occur, sooner the better.
