ASX:SHL

After trading as high as $24.50 on June 29th, shares of SHL dropped over 15% to post an intra-day low of $20.60 last Thursday.

The company got some good news last week when they won an exclusive contract to provide a pathology laboratory in two of London’s hospitals.

The contract has a term of 12 years and is expected to contribute over 12 million Sterling in revenue per year.

Looking at the internal momentum indicators, the share price is slightly oversold and has upside potential to the $22.70 area.

We consider SHL a reasonable buy/write stock which offers price appreciation and enhanced cash flow with the derivative overlay strategy.

Sonic Health

On August 16th, shares of Sonic Health care posted an intra-day high of $23.76.

The next day the company announced that NPAT fell 5% to $427 million, which was the worst component  of a reasonably good earnings report.

Our ALGO engine triggered a buy signal on SHL on Tuesday at $21.46.

We consider SHL a defensive stock, which has been oversold, and has now found good buying support in the $21.40 area.

Investors with a medium-term outlook can look to buy SHL with an initial target of $22.35 and a $21.20 stop.

Sonic Healthcare

Resmed formed a “higher low” at $8.94 and found buying interest within our “buy zone”, as advised on the blog.

Sonic Healthcare should find buying support at $21.55. Apply a stop loss below the $21.55. SHL – Ex-Div 8/9/2017 (Div 46c, Franking 20%)

Ramsey Healthcare –  Strong reversal of yesterday’s low at $65.

CSL – Algo Engine buy signal at $125.00   CSL – Ex-Div 12/9/2017 (Div $0.91 Franking 0%)

Medibank – Now looks expensive. Take profit!

Following the recent Algo Engine buy signal, Sonic Healthcare looks like it is finding support at or near $22.50.

We continue to like RMD, SHL, CSL, MPL & RHC in the healthcare sector.

On 12th July, our Algo Engine triggered a buy signal in Sonic Healthcare, at or near $22.20.

We see this as a level of price support and our base case is that Sonic trades sideways, at or near the current price.

Sonic reports earnings on the 16th of August and we expect underlying EPS growth of 8%, which will support a forward dividend yield of 3.8%.

When combining a covered call option, we’re generating 10 – 12% cash-flow per year.