We identified Well Health Technologies Corp (WELL.V) as one of the top investing opportunities of 2019: Well Health Technologies Multi-Bagger Small Cap Stock In The Making. Soon after this stock doubled: Well Health Technologies (WELL.V) Rises 32 Pct. Small Cap Super Star Of 2019. Since then though we did not see any meaningful rally in this stock. Is WELL.V still on its path to go much higher or is there reasons to believe the top is in?
First, let’s start with the latest earnings release of the company (source). It suggests the company is doing really great!
- WELL achieved record quarterly revenue of $7,402,271 during the three months ended June 30, 2019 compared to $2,066,524 revenue generated during the three months ended July 31, 2018 – an increase of 258%;
- Gross margin increased to 30.4% in the three months ended June 30, 2019 , compared to 28.4% in the three months ended July 31, 2018.
- Adjusted EBITDA loss was $556,255 for the 3-month period ended June 30, 2019 , compared to Adjusted EBITDA loss of $287,054 in the 3-month period ended July 31, 2018 .
Not only is the expansion of this company happening (fast), but it also seems that management is capable of funding its growth with limited shareholder dilution.
This is one of the biggest pitfalls for investors. Emerging sectors or high growth stocks will too often create new shares to fund its growth through ‘naive’ investors. It mostly is after the facts that investors find out about the shareholder dilution (this includes analysts like ourselves). Case in point: The Verdict On Cannabis Stock Emerald Health Therapeutics.
Not so with WELL.V.
The combination of solid management, balanced sources of funding to fund its growth, and an awesome chart setup is what we want to see!
The daily chart of WELL.V of the last 20 months is exactly what we want to see. But we also want that the stock price will respect its current upleg.
What we absolutely want to see now is a new rally starting near the yellow trendline. According to our ‘back of the enveloppe’ calculation this should start ultimately in December of this year.
If, and only IF, this support line is respected will we see a multi-fold rise in 2020.
Remember, this stock is now consolidating, and will likely continue to do so for another few months. What happens in a consolidation is something we described in our investing tips:
Consolidations create a very bullish long term outlook for any asset or market. Essentially, during sideways trading, sellers tend to leave the market every time the price peaks. If a consolidation goes on long enough all sellers leave this market. That’s the ideal market condition for a new bullish trend.
The odds favor a bullish outcome, and we are confident calling for WELL.V being a multi-bagger stock in 2020!
In closing note how this stock moved from leg #1 to leg #2 earlier this year. That’s right before we identified this opportunity. This is the type of investing tips we give in our premium service that we offer for free for another 3 months. Sign up here >>