Welcome to Buzzing Stocks & CVS DD 💊🩺
Welcome to Buzzing Stocks & CVS DD 💊🩺
Hello all, and welcome to my first post on Buzzing Stocks!
What is it?
I have built an AI algorithm which helps me identify the stocks that are most talked about on Reddit investment and trading forums, with the aim of identifying the most hyped and high potential stocks.
With the hype seen in recent weeks regarding GME and AMC stock, and the central role Reddit played, Investors and institutions are increasingly reading through Reddit forums to inform their investment decisions.
The algo does this by continuously tracking Reddit (for now, I am continually adding extra sources to it) posts and comments, analysing the sentiment of the chatter (whether that stock is spoken about in a positive or negative manner) and uses some AI trend- detection algorithms to identify which stocks have seen an abnormal surge in conversation.
I will use my Investment Banking experience to research the most talked about stocks, and distill stocks identified into some digestible research for you.
What is it not?
This is an early detection tool, meaning the stocks can sometimes jump in price, as well as sink. While I try my hardest to give you solid research, no one knows exactly how the stock market behave.
Please do your own research before investing.
Results
Head over to the interactive version
Lots of volatility this week, especially with lots of earnings announcements this week. NVDA, FSR, AMD are all ones to watch. CRM (Salesforce) also expected to see some big shifts today, but is not included in this graph.
For me, the most interesting one is CVS, which has seen a 250% increase in discussions compared to last week.
CVS DD 💊 +250% in mentions
Market Cap: $92.35bn
Let’s start off with what I feel is a very overlooked stock, with very good fundamentals: CVS Health Corporation (Ticker: CVS).
This stock currently represents the 3rd biggest holding in Michael J Burry’s portfolio, at 10% of his overall holdings. (for those of you who don’t know him, I seriously suggest researching him. He was one of the earliest to spot the housing market crash of 2008, his character played by Christian Bale in the film “The Big Short“, and identified the GameStop short squeeze as early as AUGUST 2019).
Profile
CVS Health Corporation is a US based integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. Omnicare's operations include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate.
As of December 31, 2016, the Retail/LTC Segment included 9,709 retail locations (of which 7,980 were its stores that operated a pharmacy and 1,674 were its pharmacies located within Target stores). CVS also has online healthcare presence through its websites, CVS.com, Navarro.com and Onofre.com.br.
It also provides healthcare services through its more than 1,100 MinuteClinic medical clinics as well as their Diabetes Care Centers. Most of these clinics are located within or outside CVS stores.
Fundamentals
CVS has seen both solid revenue and Net Income flows. From 2019 to 2020, revenues grew from $257bn to $268bn (+4.6%) and Net Income from $6.6bn to $7.2bn (+8.2%). CVS beat every analyst’ earnings expectations in 2020.
Balance sheet wise, the company is a strong position with a Debt to Total Equity ratio of 0.93. In short, this number represents the amount of debt the company owes vs the equity it holds, with a lower number representing a less-risky investment. the Average ratio for S&P500 companies is 1.5.
CVS has a Price-to-Earnings ratio (the price of the stock vs the Earnings per share) currently around 9x, the lower the ratio means the cheaper the stock is compared to their total earnings. Current S&P market average is around 25x.
The company has seen sustained dividend earnings, and is forecasted for continued income growth, currently at 9% annual.
Increased growth catalysts
There are rumours that CVS will open up some of their pharmacies to administer COVID-19 vaccines across the US. There are two things to consider from this:
Increased revenue streams at scale from the current US administration (this could even become recurring revenue with all the talk of yearly booster jabs)
Increased revenue from the extra footfall going into their stores (remember the last time you went into a grocery store to buy toothpaste and came out with 2 full bags?)
The relatively new CEO, Karen Lynch, is a serial success machine. For the past five years (2016 to 2020), she was named to Fortune’s list of the 50 Most Powerful Women in Business.
Potential Downsides
Amazon has announced its intention to enter the pharmacy space, which serves to the shake up the industry as a whole over the long-term.
Personally, I think the regulatory landscape of the pharmaceutical world means Amazon is still a long way away from making massive strides, and this current scenario is actually beneficial to current CVS stock price, which is lowered and under-valued because of it.
Analyst Estimates
The 25 analysts offering 12 month price targets for CVS Health Corp have a median target of $86, with a high estimate of $102 and a low estimate of $72.
Summary
The company is displaying very impressive fundamental attributes, and is currently trading at a lower price than what it’s fully worth. That, along with its positive future projections and foray into administering COVID vaccines make it a very interesting stock currently.
It has been dropping in price slightly over the last few weeks and may continue to drop further before a big bounce; technical analysis shows a support point at $69 where price may fluctuate, and possibly bounce upwards from there. At that price, I would personally be tempted to buy into the stock.
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