Report
Dave Nicoski ...
  • Ross LaDuke
EUR 217.56 For Business Accounts Only

Vermilion Compass: Weekly Equity Strategy

No changes to the status quo in terms of our expectations and what has been playing out in the markets: continued volatility and consolidation. With support levels holding and market internals remaining healthy, we retain our long-term bullish outlook.

• Small-caps are perking up. As the U.S. Dollar stabilizes and fears of a trade war brew, small-caps have begun to show strength relative to large-caps. We recommend increasing exposure to small-caps... see below.

• Smaller-cap Health Care is leadership. Broadly speaking, small-caps have recently begun to show strength relative to large-caps, one area where small-caps have shown sustained outperformance is within the Health Care Sector... see page 2.

• U.S. over international developed equities; Growth over value. No changes here. With the leadership status of both of these recommendations intact, we continue to favor U.S. over international and growth over value... see page 3.

• Market internals remain healthy. Advance/decline lines and Consumer Discretionary/Staples ratios (XLY/XLP) remain in uptrends, suggesting an overall healthy market... see page 4.

• Cyclicals are leadership. Technology, Services, and Consumer Discretionary remain at the top of our relative strength rankings (“RSR”) from a cap-weighted perspective, another sign of strong risk appetites... see page 5.

• In today's report we highlight attractive and actionable groups within Health Care: HC-24 Health Care Services, Other, HC-32 Rehab Services, and HC-42 Pet Health... see pages 10-19.
Underlyings
AAC HOLDINGS INC

AAC Holdings provides inpatient and outpatient substance use treatment services. The company's services and solutions include: detoxification, which provides detoxification services for several substances including alcohol, sedatives and opiates; residential treatment, which is a structured treatment approach designed to prepare clients to return to the general community; partial hospitalization, which includes weekly individual therapy, regular group therapy, family education and therapy, and didactic and psycho-educational groups; and outpatient services, which include screening, assessment, therapy, and other services designed to support transition to the community and long-term recovery.

American Renal Associates Holdings Inc.

American Renal Associates Holdings is a holding company. All of the company's operating activities are conducted through American Renal Holdings Inc. and its operating subsidiaries. The company is a dialysis services provider in the U.S. focused on joint venture (JV) partnerships with physicians. The company owns and operates dialysis clinics in partnership with nephrologist partners treating patients in several states and the District of Columbia. The company operates its dialysis clinics principally through its JV model, in which it partners primarily with local nephrologists to develop, own and operate dialysis clinics. The company provides patient care and clinical outcomes to patients suffering from end-stage renal disease.

Care.com

Care.com is an online marketplace for finding and managing family care. The company assists families address their particular lifecycle of care needs, which includes child care, senior care, special needs care and other non-medical family care needs such as pet care, tutoring and housekeeping. In the process, the company also assists caregivers find full-time and part-time employment opportunities. The company's consumer matching solutions allow families to search for, connect with, qualify, vet, and ultimately select caregivers. The company also provides caregivers with solutions. In addition, the company provides its members other products and services to facilitate their interaction with caregivers.

DaVita Inc.

DaVita is a healthcare provider focused on transforming care delivery to improve quality of life for patients. The company's United States dialysis business provides kidney dialysis services for patients suffering from end stage renal disease (ESRD). The company's dialysis services include outpatient hemodialysis services, hospital inpatient hemodialysis services, home-based dialysis services, ESRD laboratory services, and management services. The company's ancillary services and strategic initiatives businesses include disease management services, physician services, ESRD Seamless Care Organization joint ventures, clinical research programs, vascular access services, as well as international dialysis operations.

Encompass Health Corporation

Encompass Health is a provider of healthcare services, providing both facility-based and home-based patient care through its network of inpatient rehabilitation hospitals, home health agencies, and hospice agencies. The company's inpatient rehabilitation hospitals provide specialized rehabilitative care across an array of diagnoses and deliver patient care services. The company's home health agencies provide home care services such as skilled nursing, physical, occupational, and speech therapy, medical social work, and home health aide services. The company also provides hospice services such as pain control and symptom management, and emotional and spiritual support to terminally ill patients and their families.

Ensign Group Inc.

Ensign Group is a holding company. Through its operating subsidiaries, the company provides skilled nursing, senior living and rehabilitative services, as well as other ancillary businesses. In transitional and skilled services, the company provides short and long-term nursing care services for patients with chronic conditions, prolonged illness, and the elderly. The company's senior living companies provide residential accommodations, activities, meals, housekeeping and assistance in the activities of daily living to seniors who are independent or who require some support, but not the level of nursing care provided in a skilled nursing operation. The company's other business lines includes of mobile ancillary services.

Fresenius Medical Care AG & Co. KGaA ADS

IKang Healthcare Group Inc. Sponsored ADR Class A

JOINT CORP

Joint Corp is a franchisor and operator of chiropractic clinics that uses a private pay, non-insurance, cash-based model. The company's principal business is to develop, own, operate, support and manage chiropractic clinics through direct ownership, management arrangements, franchising and the sale of regional developer rights throughout the United States. The company's clinics provides a variety of customizable membership and wellness treatment plans. Each patient's records are digitally updated for retrieval in its proprietary data storage system by the company's chiropractors in compliance with all applicable medical records security and privacy regulations.

PetIQ Inc. Class A

PetIQ is a holding company. Through its subsidiaries, the company is a pet medication and wellness company providing veterinary products and services. The company's Rx pet medications include heartworm preventatives, arthritis, thyroid, diabetes and pain treatments, antibiotics and other specialty medications, all of which require a prescription from a veterinarian. The OTC medications the company sells are primarily comprised of flea and tick control products, which are available in multiple forms that consumers choose between, such as spot on (topical) treatments, chewables, and collars. The company's health and wellness products include treats and other pet products such as dental treats and nutritional supplements.

Phibro Animal Health Corporation Class A

Phibro Animal Health is an animal health and mineral nutrition company. The company develops, manufactures and markets products for a range of food animals including poultry, swine, beef and dairy cattle and aquaculture. The company's products include animal health products such as antibacterials, anticoccidials, nutritional products and vaccines. The company's Animal Health segment also includes antibacterials and other processing aids in the ethanol fermentation industry. The company's mineral nutrition products fortify the animal's diet and help maintain optimal health. The company also manufactures and markets ingredients for use in the personal care, industrial chemical and chemical catalyst industries.

Select Medical Holdings Corporation

Select Medical Holdings is managed through four business segments: critical illness recovery hospital, which consists of hospitals designed to serve the needs of patients recovering from critical illnesses; rehabilitation hospital, which consists of hospitals designed to serve patients that require intensive physical rehabilitation care; outpatient rehabilitation, which consists of clinics that provide physical, occupational, and speech rehabilitation services; and the company's subsidiary, Concentra Inc. segment, which consists of occupational health centers that provide workers' compensation injury care, physical therapy, and consumer health services and onsite clinics.

Teladoc Health Inc.

Teladoc Health is a provider of virtual healthcare services. The company provides virtual access to care and capabilities, with a portfolio of services and solutions covering medical subspecialties from non-urgent, episodic needs like flu and upper respiratory infections, to medical conditions like cancer and congestive heart failure. In its behavioral health business, branded BetterHelp, the company serves individuals in the direct-to-consumer market and through business partnerships with other brands. The company's consumer brands, which include Teladoc, Advance Medical, Best Doctors, BetterHelp and HealthiestYou, deliver access to advice and resolution to an array of healthcare needs.

Tenet Healthcare Corporation

Tenet Healthcare is a healthcare services company. Through its subsidiaries, partnerships and joint ventures, including USPI Holding Company, Inc., the company operates hospitals, surgical hospitals and outpatient centers. In addition, the company's Conifer Holdings, Inc. (Conifer) subsidiary provides healthcare business process services in the areas of hospital and physician revenue cycle management and care solutions to healthcare systems, as well as individual hospitals, physician practices, self-insured organizations, health plans and other entities. The company has three reportable segments: Hospital Operations and other; Ambulatory Care; and Conifer.

Zoetis Inc. Class A

Zoetis is a holding company. Through its subsidiaries, the company is engaged in the discovery, development, manufacture and commercialization of animal health medicines, vaccines, and diagnostic products with a focus on both livestock and companion animals. The company operates in two segments: the United States and International. The company's main product categories are vaccines, anti-infectives, parasiticides, other pharmaceutical products, dermatology products, medicated feed additives, and animal health diagnostics. The company's other non-pharmaceutical product categories include nutritionals and agribusiness, as well as products and services including biodevices, genetic tests and precision livestock farming.

Provider
Vermilion Research
Vermilion Research

Vermilion Research delivers timely, actionable, and unique research inputs to professional investors. Our research strategists highlight securities which we believe are at major inflection points, based on our various proprietary technical indicators, and offer asymmetric risk/return profiles. We believe our research methodology, which is not limited by industry sector or market capitalization, enables us to deliver superior investment recommendations.

Our process begins by organizing all actively traded stocks into coherent sectors, then into logical industry groups. We then apply our proprietary relative strength tools to identify developing price trends. Once attractive trends are identified within a selected sectors or groups, we screen for individual stocks which we believe offer the best risk/reward profile. Vermilion offers U.S. and global equity market research products. Vermilion’s research team, which has received numerous awards and accolades, has a combined 70 year of experience in the analysis of investment securities.

Analysts
Dave Nicoski

Ross LaDuke

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