National Medical Health Card System Inc (NMHC $25.95) is an established leader in managing prescription drug programs for HMOs, employers, local governments, union groups and third party administrators.

According to the company, NMHCRX, headquartered in Port Washington, NY with service centers in Latham, NY and Little Rock, AR has been raising the bar by striving for innovation in technology, and providing unmatched clinical and service experience for over two decades. The company's efforts have proven successful as it ranked 27 on Fortune magazine's 2003 "America's 100 Fastest Growing Companies" list.

CANSLIM related high points for this leading company of IBD's highly ranked Medical/Dental-Service group include:

• Decent Current quarterly earnings comparisons (see numbers below)

• Nice Annual earning history with steady EPS increases year to year since 2001 and estimated increases in coming years.

• New sponsors (customers), as well as growth in existing sponsors during the past quarter. All time New price highs.

• Small supply of Shares outstanding (7.65 mil) means stock can more easily move. (up or down)

• A Leading company as the stock is currently in IBD's list of " Top 5 Companies in the Medical/Dental-Services Group".

• With Institutions owning 4% means mutual fund managers are aware of NMHC and there is room for more possibly to step in.

Technically the chart for NMHC makes for an interesting case as the stock quickly doubled and became very extended in about a month's time (10/30 - 12/02) then consolidated near its 50 DMA. Another important aspect to recognize is the volume during that move and through today is overall more intense compared to before its run started on 10/31. The stand out trading action of that day coincides with a pre-market press release, titled "National Medical Health Card Announces Major Initiative to Accelerate Growth" the company issued that morning.

The stock has continually run into resistance near the $26-$27 range. On 02/10 while attempting to follow up on a just previous good up day with a big volume breakout, it was turned back at $27.25. That day it actually wound up closing the session with a substantial loss but importantly held above a fairly substantial upward trend line. This action leads to the possibility that the more skittish investors were shaken out and the current investors may be more willing to hold.

Currently the stock sits near all time highs with the last two session with light volume may be an indication that there are not many willing sellers at this point. If one adds ten cents to NMHC’s most recent significant high of $26.00 on 12/03/03, they would arrive at a pivot of $26.10. As always a break through the pivot point on heavy volume would trigger a technical buy signal and the patient investor should wait to see this possibly occur before buying.

A key concern is that National only trades an average of around 56,500 shares on a typical trading day. This may make it difficult for institutional investors to avoid disrupting the share price when making any meaningful accumulation or distribution of ownership interest.  Company management, it is worth noting, owns a 48% interest, which certainly keeps them motivated to maintain and maximize shareholder value.  Due to liquidity concerns, investors may still want to tread very carefully.  Consider taking a smaller than normal position and possibly adding to it assuming more reassuring technical action.  Watch the stock very closely, as the action on 10/31 proves how extremely volatile this stock can be.  Also study its weekly chart, which shows that the stock has already enjoyed a substantial run.  Thus, the proper sell discipline is advised as always, which means always limiting losses at 7-8%. 

More Info: 5-year Chart from BigCharts.com

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