CVS Health Is Oversold: Why Now May Be the Time to Buy
Shares of CVS Health (NYSE:CVS) have been falling 12% in the past month and they are now around their 52-week lows. The selloff has been so significant that the stock also dipped into oversold territory with a Relative Strength Index (RSI) falling below 30. RSI is a momentum indicator and when it is under 30, that means there has been an excess of selling of a stock in relation to buying. It can be a sign that the stock could be due for a rally, especially if a deteriorating outlook or worsening financials aren't the reason for the decline in price.
In CVS' case, the business remains solid and there haven't been any significant press releases of late to suggest that investors should be more bearish on the company's future. Trading at a forward price-to-earnings multiple of 10 and a price-to-book multiple of just 1.7, the stock is a relatively cheap buy right now. And with the decline, the healthcare stock's dividend yield is now up to 2.7% -- which is well above the S&P 500 average of 1.8%.
For both value and growth-oriented investors, the stock can be an attractive investment option as it pays a great dividend and its diverse operations give you a great way to tap into opportunities in the healthcare industry. Most recently, CVS has been rumored to be in talks with acquiring primary care provider Oak Street Health (NYSE:OSH) for approximately $10 billion. If successful, the move would further expand CVS's reach in the industry, not to mention strengthen and further diversify its financials.
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