Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Ryman Stock Can Revisit Its Covid Crash Lows

By EWM Interactive Stock MarketsJun 18, 2021 08:19AM ET
www.investing.com/analysis/ryman-stock-can-revisit-its-covid-crash-lows-200586931
Ryman Stock Can Revisit Its Covid Crash Lows
By EWM Interactive   |  Jun 18, 2021 08:19AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Retirement homes were hit especially hard by COVID-19. Sadly, many of their clients lost their very lives as elderly people are the most vulnerable demographic. And although New Zealand and Australia have so far dealt with the pandemic better than most, the spring of 2020 was a real nightmare for companies like Ryman Healthcare (NYSE:RHP).

With its 34 retirement villages in New Zealand, two in Melbourne and eight under construction in Victoria, Ryman is a large rest home operator. So when the coronavirus panic struck last year there was no way for the stock to escape the carnage. After trading above NZ$17 in February 2020, RYM was down 61% to NZ$6.61 at one point in March.

Fortunately for investors, most of those losses were erased almost as quickly as the gains before them. By November 2020, Ryman was hovering around NZ$16 again. As of this writing, however, the recovery seems to have gone out of steam. With the share price slightly over NZ$13.20, is this a dip to buy or the start of another big selloff?

Ryman Stock Weekly Chart
Ryman Stock Weekly Chart

The weekly chart above visualizes Ryman ‘s entire history as a public company. It also reveals that the 20-year uptrend from the IPO until the top in 2019 has taken the shape of a textbook five-wave impulse. The pattern is labeled (1)-(2)-(3)-(4)-(5), where the five sub-waves of wave (5) are visible, as well.

Charts and Fundamentals Agree that Ryman Healthcare is Expensive

Ralph Nelson Elliott once discovered that a three-wave correction follows every impulse. Of course, we can never be sure what would’ve otherwise happened. However, this means Ryman stock was supposed to decline even without Covid-19. It was time for a retracement anyway.

The problem is that last year’s crash doesn’t look like a three-wave pattern. It looks more like a single wave (a) within a larger correction that is still in progress. If that assumption is correct, the following recovery to NZ$ 16.02 must be wave (b). This, in turn, suggests the current weakness is the beginning of wave (c).

C-waves usually breach the end of the corresponding wave A. In Ryman ‘s case, this translates into a decline below NZ$6.61. In our opinion, bearish targets in the NZ$6-5 area make sense as long as the stock trades below NZ$16.

Besides, Elliott Wave analysis is not the only reason we’re skeptical of Ryman stock. The company makes about NZ$150 million in free cash flow a year and has a market cap of NZ$6.5 billion. This gives us a P/FCF ratio higher than 43. Quite expensive for a company that is not growing that fast and has NZ$2.3 billion in debt.

In conclusion, fundamentals and charts seem to agree that NZ$13 a share is too high a price for Ryman Healthcare. The stock can revisit its Covid crash lows before the bulls return. We plan on watching from a safe distance.

Original Post

Ryman Stock Can Revisit Its Covid Crash Lows
 

Related Articles

Daniel Shvartsman
A Bear Market Shopping List By Daniel Shvartsman - Jun 25, 2022 17

Volatility has been the constant in the 2022 bear market. Wherever we go in the next 12-18 months, bargains are starting to emerge. Here are five stocks I think are positioned well...

Brett Owens
Almost 13% Yield Monthly? Come On By Brett Owens - Jun 24, 2022

Patience is the key to being a successful contrarian investor. We buy when fear is widespread. Bear markets are our friends. Let’s sit back and let the market’s...

Ryman Stock Can Revisit Its Covid Crash Lows

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email