Is Red-Hot Tivity Health Stock Maxed out?

There's massive short squeeze potential for TVTY, too

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A year ago today, fitness solutions provider Tivity Health, Inc. (NASDAQ:TVTY) was sitting in penny stock territory just under $5. What a 12 month's it's been, with the stock last seen trading at $23.62. Below, we'll dive into more technical details surrounding TVTY, and whether the under-the-radar stock is worth your time.

For starters, there's massive short covering potential for the equity. Short interest increased by 13% in the most recent reporting period, and the 14.50 million shares sold short accounts for 17.2% of TVTY's total available float. At the stock's average pace of trading, it would take shorts almost 15 days to buy back their bearish bets; an ample amount of buying power that can unwind and fuel additional upside.

And while the shares are down 2% in the last 30 days, chart support has emerged at their ascending 80-day moving average.

TVTY Stock Chart

From a fundamental point of view though, Tivity Health stock isn’t the safest play available on the market for stock traders. The company has $523 million in debt and only $100 million in cash. Tivity Health also took a significant revenue hit last year as a result of the COVID-19 pandemic. The company's revenues dropped 61%, or about $700 million, in fiscal 2020 and brought TVTY's total sales down to $437 million. However, Tivity Health surprisingly improved their net income over the past year. The company added over $50 million in the bottom line, which brought their net losses to $223 million.

TVTY was growing its revenues at a notably fast pace prior to 2020. Between fiscal 2017 and fiscal 2019, Tivity Health more than doubled its revenues. Although the company isn’t profitable at this very moment, Tivity Health stock has a forward price-earnings ratio of 15.29. Overall, TVTY is undoubtedly on the riskier side, but the potential upside remains huge.

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