July was a dreadful month for growth stocks and indexes, with things like the IBD 50 Index and the iShares MSCI USA Momentum Fund (MTUM) off well over 10%. But I still like Guardant Health Inc. (GH), which has only retreated to its 50-day line on modest volume, notes Mike Cintolo, editor of Cabot Growth Investor.
It’s not 2008 out there. Our watch list remains long, with many growth stocks outside of AI infrastructure consolidating normally. We’re not forgetting that most of the longer-term signposts are bullish, too.
Guardant Health Inc. (GH)
As is often the case, earnings season will be key: The vast majority of growth stocks we own or are looking at have reported or will soon report second-quarter results. If we see more destruction, especially among names that have held up well, that would obviously be a bad thing. But some positive reactions could bring upside breakouts in names that have been building launching pads for two-plus months.
As for Guardant, another blood-based colorectal cancer screening test was approved by the FDA in recent days. That will surely add to the competition.
But Shield has a two-year head start in terms of usage and building insurance coverage, and the size of the potential market is enormous. Think of something like five-million-plus Cologuard tests per year plus millions more other stool-based screening tests…compared to a couple hundred thousand blood-based tests.
With GH acting fine, we’ll stay on “Buy” – but will be on the horn with any changes if need be.
Recommended Action: Buy GH.
