Universal Health Services is engaged principally in owning and operating acute care hospitals, behavioral healthcenters, ambulatory surgery centers and radiation oncology centers. For the fiscal year ended 12/31/00, revenues rose 10% to $2.24B. Net income rose 20% to $93.4M. Revenues reflect 17 new facilities and growth at acute care and behavioral care facilities. Net income reflects lower depreciation expenses as a percentage of sales.

March 15, 2001

UHS is a major hospital owner and operator that is best known for its acute care and behavioral health centers. UHS peaked at $112.93 at the end of December. Although the stock has been a somewhat lackluster performer since that time, we believe now is an excellent time to try and snag some profits for two reasons. First, UHS appears to have successfully tested its 200-DMA of $80.00 this week. This event is technically significant and many value investors (and there are a lot of them these days) look for these type of bounces before entering a position. Second, UHS is a viable split candidate because the stock is trading at prices well above those when the stock last split. The most recent split occurred during the spring of 1996 when the stock was trading at $56.38. The OBV and Money Flow are both starting to turn back positive, which is another good sign that UHS has found support and is ready to go higher. The RSI is starting to move back up from a mild oversold indication. This fact gives UHS a lot of room to rally before an overbought condition is threatened. Some traders may be interested in picking up the stock if UHS can trade above $83.75 with midday volume near 150,000 shares.

Picked on March 15th @ $83.50
Change since picked +0.00
Stop Loss @ $80.00