The doctor’s orders become virtual.
With Covid-19 case counts on the rise again, TeladocTodd Gordon, founder of TradingAnalysis.com, told CNBC’s that a stock at the intersection of healthcare and technology could be an ideal choice for investors looking for ways to anticipate potential volatility “Trading nation” on Thursday.
“This company … has the opportunity to really disrupt the health system as we know it for the next decade,” said Gordon.
Teladoc has a market cap of $ 26.4 billion and specializes in remote health services and analytics. The company made a deal with Acquisition of the artificial intelligence company Livongo last week and has developed ways to provide preventative care through “digital maintenance,” said Gordon.
“The total addressable market is … only half a trillion dollars for the future. Given this new health care, digital, work-at-home, stay-at-home, maybe health-at-at-home age, I like that Great prospects both technically and fundamentally, “he said.
Tech-wise, the stock has performed nearly 858% since going public in 2015, downright “amazing,” Gordon said.
After withdrawing in late 2018 and a subsequent rally, Teladoc has now entered a phase of consolidation, he said.
“I would say given the recent market volatility the shape of this correction is not a cause for concern,” he said. “In fact, I think it’s pretty constructive.”
Referring to the Elliott wave theory, a type of technical analysis aimed at detecting certain patterns in the marketplace, Gordon suggested that Teladocs was near the end of what is called a corrective wave.
According to theory, stocks typically correct in an A-B-C pattern, where A is the lower leg of the first leg, B is a short rest, and C is the last leg of the decline. The pattern tends to “intensify” when the A and C declines are about the same, as is the case with Teladoc, Gordon said.
“The fix appears to be done. It looks like we’re going up here,” he said. “We just reported profits. They were very strong. You completed this merger with Livongo last week. The volatility is way out of the stock and I think it will rebound.”
Gordon added that he is beginning to see “accumulation of support” in the table around $ 160-170. Teladoc stock fell nearly 3% on Friday to around $ 181.96.
“I will try to add this stock to both my portfolio and that of our clients,” said Gordon.
One way of doing this could be through the options market, he said. He made a bullish trade that expired on January 15th by buying the $ 200 strike call options and selling the $ 220 strike calls, a bet that the stock would trade at least 7% by mid-January could.
While the trade “has a good positive risk-reward ratio, we like to manage it that way, if you hang up the trade and it is reduced, the value is … about half what you paid,” Gordon said .
When that happens, “cut the trade, limit risk, and move on,” he said.