Jon Lewis

Express Scripts -- Just What the Doctor Ordered

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Express Scripts (ESRX) offers pharmacy benefit management services. That's a hot area to be in right now, which may be why analysts expect a healthy 13% increase in profits this quarter when the company reports on July 29.

But that's OK with EXRS, since they've met or beaten the consensus earnings estimate for nine straight quarters. And in three of the past four quarters, the stock has gained between 5% and 6% the day following its report.

Technically, the shares are rising along the dual support of their 20-day and 50-day moving averages. The 20-day has done most of the heavy lifting. But when it's failed, the 50-day has been there to bail out the stock.

The most recent successful test came last week.

Sentiment toward ESRX is largely bathed in optimism, especially among analysts.

The put/call ratio is relatively low, but it's been falling -- a sign of pessimism being squeezed out of the shares. Plus, short interest has been on the rise, raising the possibility of post-earnings short-covering.

But this is primarily a technical and fundamental trade. Look for ESRX to extend its impressive earnings run and for the stock to break through its June highs.

Think about purchasing call options on ESRX ahead of its earnings announcement.

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Jon Lewis is the co-editor of The Winning Edge trading service designed to help you make options profits around corporate earnings and other market events. For more information about Jon, read his bio here.