With over 180 hospitals in its system, HCA Healthcare Inc. is the biggest hospital operator in the United States. Understandably, the company is also a heavy-puncher in terms of sales with more than $60B recorded in 2022. In its twelve years of trading on the NYSE, HCA stock has returned 695%, not counting the dividends. In comparison, the S&P 500 index is up just 200% over the same time period.
It hasn’t been a smooth ride for HCA Healthcare investors, however. The stock has already experienced two notable declines of 62% and 41% in 2020 and 2022, respectively. In fact, the share price still hasn’t fully recovered from the latter. Last month, the bulls stopped just $10 shy of a new all-time record. Chances are they’ll eventually succeed and conquer the $280 mark. Should that be seen as an “all clear” buy signal? After seeing the Elliott Wave chart below, we remain skeptical.
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The weekly chart of HCA reveals the stock’s entire uptrend since its IPO in early-2011. Its structure reminds us of a five-wave impulse pattern, labeled (1)-(2)-(3)-(4)-(5). The five sub-waves of wave (1) are also visible. Wave (2) stands for the Covid-19 panic of March, 2020, while wave (5) appears to be still in progress.
Fifth waves almost always exceed the top of the corresponding third wave. If this count is correct, we can expect a new record near $300 a share in wave (5) to complete the pattern in the weeks ahead. The bad news is that a three-wave correction follows every impulse. Corrections usually erase the entire fifth wave. This translates into a decline back to $160-$150 for a drop of roughly 50%. Something most investors, us included, would rather avoid if possible.
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