Evolent Health ($EVH)
A growth stock with CANSLIM traits or just another failed breakout in the making?
It’s no secret.
Some of the best performing stocks in history showed strong relative strength during market corrections. Often breaking out into new highs before the market has started its rebound.
The ones who buck the trend and produce stellar returns often have a strong mix of sales and earnings growth along with a new product or service. Lets take a look at Evolent Health and see if this little growth stock can improve the health of our portfolio.
What is Evolent Health? You can access their full investor presentation here.
They provide Technology Driven Solutions For Health Plans and Providers That Improve Health Outcomes and Lower Costs. Their mission is to change the way healthcare is delivered and they consider themselves a leader in value based care.
Show me the money!
EVH has put together a string of impressive quarterly revenue growth numbers resulting in a 35% Compounded Average Growth Rate since 2019. This is done via a mix of adding new customers and expanding relationships with existing customers.
I get a little warry when companies start talking about “potential” of possible revenue channels. However, this might be worth a deeper look as it signals a possible large jump in annual revenue capture.
Summing up the fundamental side below
The fundamental side looks interesting.
Lets take a look at Marketsmith.
The composite rating is 99 (out of 100), with strong future EPS growth estimates, a top 50 group performance wise, up/down volume of 1.4 (very strong) and consecutive quarters of increasing fund ownership. Very solid. It broke out of a cup and handle pattern on high volume. The RS line looks great. The volume bars at the bottom look like accumulation. Lets move to the daily.
We see two pivots here. The first is at 33.14 and one at 34.60. Price blasted through the first on high volume (very good) and got rejected at the second (not great).
As I am writing this, EVH is trying to break through the second pivot at 34.60.
Anything above the first pivot of 33.14 is bullish IMO.
This name is a firecracker and is prone to large, whipsaw moves.
Be careful scaling in.
As always, good luck out there. I hope this helps you in your journey to catch the next monster stock. Will EVH be it?
We don’t know, and that is why we play the game.
-NS