Locking in a Nice Gain on a Holding and Downgrading the Stock
| Symbol | Transaction Type (Sell/Buy) | # Shares Traded |
|---|---|---|
| LH | Sell | 220 |
After you receive this Alert, the Pro Portfolio will sell 220 shares of Labcorp ($LH) at or near $281.50. Following the trade, we will own 220 LH shares, accounting for roughly 1.0% of its assets.
Earlier this month, when we trimmed the Pro Portfolio’s position in Labcorp near current share price levels, we said the following on the shares:
… they have been trading in a channel between $250 and $290. The drivers behind our rationale for owning the shares remain in place, but our thinking is we are likely to get an opportunity to rebuild the position size at lower prices. We can also use the cash for other positions in the Portfolio or for some new opportunities that may present themselves.
With that in mind and because HCA Healthcare’s ($HCA) preannouncement on Affordable Care Act coverage lost during Q2 is a likely volume and margin negative for LH shares, we are opting to lock in more gains and downgrade our rating to Three from Two. Competitor Quest Diagnostics ($DGX) will report on July 23, and based on what we learn, we may opt to close out the position. Should that come to pass, Labcorp would likely land in the Portfolio’s Bullpen at least until a more favorable re-entry point emerges.
In the meantime, this move will help rebuild our cash position as the vector and velocity of Q2 earnings season pick up this week and next.
More Pro Portfolio:
- Trimming One Holding, Adding to Another as We Boost Our Rating
- We’re Tracking 23 Signals Across 10 Portfolio Investing Strategies
- Weekly Roundup: Chip Rout Tests the Market, but Here’s How We Aim to Capitalize
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade’s executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long LH.
