When I find one bullish signal on a stock, I investigate…
If I then find two more, I take the setup seriously.
That’s what’s unique about today’s opportunity in under-the-radar name Elevance Health (ELV).
If you’re unfamiliar with Elevance, they operate medical insurance plans. Formerly known as Anthem Inc., they provide vision, dental and supplemental health care benefits across the United States. On the government side, plans include Medicare and Medicaid.
Point is, this is a high-quality business that’s not going anywhere.
And after trawling through our TradeSmith data, I was able to spot a few bullish catalysts…a couple of which are teeing up right now.
Just like in March, when we were able to identify UnitedHealth Group (UNH) as a cure for rising health care costs, Elevance gives us plenty of reasons to be excited.
Let’s explore them now…
Three Reasons Elevance Health is a Great Stock to Bet on Now
On the technical side, this trade has something for both momentum-chasers and mean-reversion traders. Let’s start with the latter crowd.
On Oct. 8, something rare occurred. Elevance Health shares dropped seven days in a row:
Going back to 2002, ELV shares have only had a seven-day down streak 10 times…making it a very rare event. And here’s what happened next:
- A month later, the shares were up an average of 4%
- And two months later spelled an average gain of 7.08%.
And to top it all off, the positive win rates for these events are all well above 50%.
Again, investing is all about stacking the odds in our favor. Knowing that ELV tends to rebound strongly after such a down streak is a great way to do that. This is reason number 1 to get excited about Elevance Health stock.
But if this pure reversion signal doesn’t excite you, we’ve got more!
Reason number 2 to jump on shares of ELV comes down to a powerful seasonal tailwind.
By using TradeSmith’s Seasonality tool, I was able to spot one of the strongest seasonal patterns that jumped off the page.
Over 15 years of data, shares of ELV have jumped an average of 10.13% over the nearly three-month period from Oct. 7–Dec. 30.
Just as impressive is that ELV was up 93% of the time:
Let’s do a quick recap to see where things stand.
First, we have an oversold bounce favoring ELV. Second, we have a powerful seasonal pattern starting right now.
Then there’s another signal that’s qualitative in nature and puts Elevance in the all-star league of stocks…
Reason number 3 to buy shares of Elevance Health comes down to the staggering dividend growth.
Few things excite me more than growing dividends. But I’ll make an exception when we’re discussing an oversold + seasonal opportunity!
Growing dividends represents a healthy business that rewards shareholders. Few companies fall into this bucket.
And Elevance Health has been steadily increasing its dividend payout yearly. In 2017, annual dividend payments amounted to $2.70 per share. Analysts expect that annual payout to hit $6.52 for the full year 2024. That would be 141% dividend growth in seven years.
Folks, that’s one healthy trend:
Utilizing an evidence-based approach to sort through them is how you not only win, but how you find tomorrow’s leading stocks today.
If you’re not using software tools like TradeSmith to uncover hidden situations like ELV… you’re missing out.
Here’s wishing you good health in 2025…and even better wealth!
Regards,
Lucas Downey
Contributing Editor, TradeSmith Daily
Everyone wants to know when to buy, sell, or hold a stock. FAST Graphs reveals this by clearly illustrating the value of the business relative to its stock price. Get 25% off using Dividends and Income's special referral link and coupon code AFFILIATE25
Source: TradeSmith
