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Investors hate medical testing company
Quest Diagnostics (
DGX). With a short ratio of 12.26, investors hate this stock so much, in fact, that it would take two-and-a-half weeks of buying pressure at current volume levels for shorts to cover their bets. That makes Quest a large-cap short squeeze candidate this week.
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Quest provides clinical testing at a network of 2,000 locations across the country. If you've taken a blood test or a drug screening in the last few years, there's a good chance it was at one of Quest's facilities. There's a lot to like about this company right now: It's recession resistant (physicians' blood work orders don't ebb and flow with the economy), margins are thick, and an aging population should boost demand for DGX's services. That's particularly true if Obamacare increases the number of insured patients in the U.S.
Quest has been adding some new tests to its menu in recent years. The addition of more complex products like genetic and pathological tests require more advanced equipment and additional technicians, but they also provides a huge shot in the arm for net margins. In the meantime, renegotiated managed care contracts should help correct the falling margins in Quest's older, standard tests.