Healthcare Stock Could Soar in Q3, If Past Is Precedent

ALGN stock could be headed back to record highs

Managing Editor
Jul 5, 2018 at 12:30 PM
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Shares of medical technology concern Align Technology, Inc. (NASDAQ:ALGN) have been in a long-term uptrend since early 2016, rallying nearly 500% in that time frame. The stock recently pulled back from its record June peak, but ALGN may be in store for another leg higher, as it has been one of the best stocks to own in the third quarter, looking back over the last decade.

According to Schaeffer's Senior Quantitative Analyst Rocky White, the Invisalign maker has averaged a gain of 11.85% in the third quarter during the past 10 years, and boasts an 80% win rate in the July-September period -- not far off the stellar returns of Edward Lifesciences (EW). Based on its current perch, another move of this magnitude would put Align Technology shares near $378 -- another fresh record high for the stock.

At last glance, ALGN is down down 0.2% at $337.87. Align Technology stock has been a long-term outperformer on the charts, with its recent pullback contained by the $335-$340 region. The stock has picked up an impressive 123% over the past 12 months, and unsurprisingly has earned 11 out of 14 "strong buy" ratings from covering analysts.

Daily Chart of ALGN Since July 17

Digging deeper, those wanting to bet on more upside for Align Technology stock may want to consider doing so with options. The security's Schaeffer's Volatility Index (SVI) of 35% ranks in the 29th percentile of its annual range, meaning short-term options are pricing in relatively low volatility expectations at the moment.

Lastly, options traders hoping to speculate on the equity's short-term trajectory will be happy to know that ALGN has exceeded the options market's volatility expectations during the past year. This is indicated by the stock's Schaeffer's Volatility Scorecard (SVS) of 80 out of 100.

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