Unlock: Cardinal Health (CAH) – Taking Profits +62%
It pays to do fundamental research. This trade was recommended on December 14, and closed a week later on December 20 with a +62% gain! To learn more about our approach and how you can become a successful trader, sign up for a 4-week trial and test drive the JaguarLive chat room: SUBSCRIBE
Cardinal Health
Ticker: CAH
Sector: Drug Distributor
Current Price: $50.44
Target: $42.00
Stop Loss: $55.00
Time Duration: 91 days
Trade Idea – Buy CAH March 50/42.5 Put Spread for $2.40 or less.
This is one of Top Shorts that was picked out by Jaguar Team during our quarterly conference call last Wednesday to be included in Q1 Outlook. On Wednesday stock was trading at $55. Now it is trading at $50.50. Since we made this our pick, two new pieces of information have surfaced (both came out today) that has made the bear case even more compelling. Hence I am issuing this now and will find a different stock as replacement in Q1 Outlook.
CAH is a drug distributor and it will be front and center of discussion when Bernie Sanders in early January proposes drug ceiling for pharmaceuticals which will have trickle down impact on CAH margins. This much is already known. Here is new information:
- Today NY Post has an article out (covered in First Read) that the judge is having reservations and looking to block merger between CVS and AET. Please note CVS is CAH’s biggest customer. This is having an impact on stock, sending it spiraling down by -3.5%.
- About an hour ago it was revealed that CBS 60 minutes on Sunday will feature Ohio governor that will criticize certain drug companies and distributors over the role of opioid crisis. This could create selling pressure on entire group of drug distributors next week (CAH, MCK, ABC).
