Mega Move Incoming For WELL Health $WELL $WLYYF
OK so after seeing the fundamentals were pretty sound:
1. Earnings out earlier than scheduled which is very bullish
2. They just did a $305M raise priced at a 25% premium to market which was led by Mr Li Ka Shing (29th richest man in the world) who put up $105M of his own money
3. Completed the CRH Medical acquisition which analysts anticipate will bring the company to over $300M in revenue and $50M in free cash flow.
4. JP Morgan the largest healthcare bank in the US extended the CRH credit line from $200M to $300M
5. 0 debt on the balance sheet and $80M in the bank after the recent financing
6. What looks like a partnership with Apple? They are now the first Canadian company to offer EMR records on Iphone.
7. They have historically beat earnings guidance and I think could do the same here given how strong of a close they had on Friday.
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I decided to take it one step further and dive into the charts. Canadian company so I'm going with the Canadian ticker "WELL" as it seems to get most of the action.
I like to start my TA by zooming out to the maximum relevant period for any story. This last year given the pandemic seems like the most logical time frame for this... The stock performed exceptionally well throughout the pandemic and is now finding itself consolidating in the $7 range.
Now the key for me is that within this consolidation period the company has made immense progress as I stated above. This is an entirely new story , management was able to use their operational skills and really take advantage of this situation.
1. They raised an additional $305M led by the 29th richest man in the world who has invested in every single round to date... This one priced at a 25% premium.
2. They used that capital to acquire CRH Medical which is going to bring revenues to $300M and free cash flow to $50M
3. They acquired Circle Medical - a leading silicon valley company which is going to allow them to compete with any US Healthcare company.
4. They are now the first Canadian healthcare company to directly integrate into Iphone.
5. and still they have 0 debt and what I calculated to almost $80M in cash...
To put it simply - they are on a hot M&A streak and doing it very very well (no pun intended lol).
SO this is where it gets interesting for me - If we zoom out a year to the point they last started bolstering up M&A activity around March/April we see WELL is sitting clean on its 200day SMA before making a monster move for the better half of the year.
Now this is where they stood apart... Unlike other companies who experienced monstrous returns over the year and didn't focus on the operational aspect (Cough cough CLOV) WELL was able to use this time to focus on operations and exponentially increase its revenue, brands, cashflows, and ultimately justify its stock price up here.
Now here is where the TA comes in... A year ago they were sitting flush on the 200 Day SMA right as they started increasing M&A Activity... Now again, after making hugely successful acquisitions with CRH, Circle, etc while in this consolidation period WELL is again sitting clean on its 200day SMA and has double bottomed with a higher low and is further shown with the RSI being oversold and coiled in the right direction. .. There is also a massive Bull Flag forming... Further suggesting a huge breakout
[1Year\/Daily \(200day SMA confluences\) ](https://preview.redd.it/rloh016ij5y61.png?width=2874&format=png&auto=webp&s=b480d9d3d67d44c2c757dd4234ed8803d9072309)
Now obviously one time frame doesn't tell the whole story so I went deeper.
Right, 6 month/Daily shows the same thing - Massive consolidation - Bull flag - Higher low - and a clean on its 200 day SMA.
[6Month\/Daily - Higher low - Bull flag - Double bottom.](https://preview.redd.it/wejhg81hn5y61.png?width=2876&format=png&auto=webp&s=79e205d5e494309bc55812d0a8a74f2210136d02)
10 day/Hourly - WELL Closed on strong volume right below its 50 day SMA - The last time was on 04/23 when it closed just below its 20 day SMA on strong volume and proceeded to move 10% + (Caused by a failed short report).
[10 days\/Hourly](https://preview.redd.it/bzzwkfayn5y61.png?width=2874&format=png&auto=webp&s=a81147d55aaa39ab985e6b88a0323d5be4ed0601)
So that led me to look at the volume... Which we see is roughly double the week prior.
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[Volume Increase 04\/09 - 05\/07 ](https://preview.redd.it/0d1flpjho5y61.png?width=2482&format=png&auto=webp&s=573ba72ecbdc124b99ebddf9f92860e17c6fd40b)
Analysts are expecting record earnings Tuesday so that's more than likely the cause.
Now that brings me to my final question? Where can this go?
On a short term we see an inverse H&S and a next resistance at 7.18 (Likely opens above that I think)
https://preview.redd.it/vffo46n3p5y61.png?width=2860&format=png&auto=webp&s=256fa9d69a481aacc997a97dd96fe378a0894415
Now this 7.18 level is key to break so the next stop would be 7.80 as we see here (+10%)
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https://preview.redd.it/2oktpnxep5y61.png?width=2872&format=png&auto=webp&s=509a680d5f995a9009e64078c057aec47b500404
Once that 7.80 level is reached which I believe earnings will help us achieve then we need to zoom out again and look at where this really could go... The answer to that is obviously subjective based on what happens in the business but I think as they are exponentially increasing the value of their core business via M&A activity the very same thing could happen with the stock.
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https://preview.redd.it/snwojxnzp5y61.png?width=2634&format=png&auto=webp&s=1a929096195ed04fb7402f0879c6e964fff8f345
I believe if earnings are positive that WELL could break out of this $7-$9 consolidation zone and find itself trading in a new zone, likely blue skies somewhere in the teens or 20s.
I really have conviction in this because they just raised $305M priced at a 25% premium to market at the time ($9.80) which the 29th richest man in the world put up $105M of...
Now the question is to load up before earnings or watch and see what happens but potentially miss out on this move.