On Tuesday, the S&P 500 did something it hasn't done since 1978: it hit an intraday high, up 4.1%, only to finish down 1.6%, continuing the tariff -induced market crash.
As a result, only seven Nasdaq stocks hit 52-week highs yesterday, compared to 509 hitting 52-week lows. On the NYSE, the win/loss ratio was 1/437, another reminder of how bad the markets views this tariff turmoil.
I don't know which is harder: Picking one of the seven NASDAQ stocks hitting a 52-week high that will continue to move higher or going through the 509 that hit 52-week lows to find the best value play available under these troubling economic circumstances.
Unfortunately, I'm paid to talk about investment opportunities, not to sit on my hands or twiddle my thumbs, so I've decided to go with the easier task of selecting one of the seven NASDAQ stocks hitting a 52-week high that I believe can keep moving higher.
Alignment Healthcare (ALHC) hit its 54th 52-week high on Tuesday, gaining over 6% on the day. It is now up 68% in 2025 and nearly 294% over the past 12 months. Interestingly, it’s only up 95 cents since it went public in March 2021 at $18 a share.
Here’s why it could maintain momentum into the $20s and beyond over the remainder of 2025.
It’s Come a Long Way
As mentioned in the intro, Alignment has been a public company for over four years, yet its share price has vacillated wildly between an all-time high of $21.06 yesterday and a low of $4.62 in April 2024.
It’s hard to know which is the real deal.
If you judge the provider of senior-focused healthcare through Medicare Advantage health insurance plans by revenue growth, it’s an impressive business. Founded in 2013, it has grown significantly. In 2019, it had an annual revenue of $754 million from 49,313 health plan members and 12,072 third-party member plans. In 2024, it finished the year with $2.7 billion in revenue and 189,100 health plan members, a nearly four-fold increase over the past five years.
As it states in its 2024 10-K, the five-year CAGR (compound annual growth rate) for the number of members enrolled in its HMO (health maintenance organization) and PPO (preferred provider organization) were 29% and 31%, respectively.
According to its January 2025 presentation, it expects 35% growth in its health plan membership in 2025. Assuming a 20% CAGR in 2026 through 2030, it should have 572,000 based on 230,000 at the end of this year.
By then, it should be profitable.
How’s the Pathway to Profitability?
It finished 2024 with a non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.3 million, its first year of positive EBITDA. However, its net loss was $128.1 million, so GAAP profitability is still far away.
The good news is that its net loss was 14% lower than in 2023, while its adjusted EBITDA had a relative increase of nearly $37 million, and as mentioned, delivering its first year of profitability based on this non-GAAP financial metric.
One mixed result in 2024 was its adjusted gross margin, which decreased by three basis points to 11.2%. In 2025, it expects an adjusted gross margin of 11.5% at the midpoint of its guidance, based on adjusted gross profits of $430 million (42% growth) and $3.75 billion in revenue (38% growth).
It expects adjusted EBITDA of $47.5 million in 2025, 3,501% higher than in 2024. That’s a 1.3% adjusted EBITDA margin.
As mentioned, the company’s guidance calls for 230,000 health plan memberships by the end of 2025. That’s $16,296 per membership. If it reached the projected 572,000 in 2030, that would be $9.32 billion. If it were to boost the adjusted EBITDA margin to 10% over the next six years, it would generate nearly $1 billion in adjusted EBITDA profitability by 2030.
That should deliver GAAP profitability, likely much sooner than that.
The $20 Million Question
Before considering Alignment’s valuation, one must consider the prospects of the Trump administration doing something to upend the apple cart, which is Medicare and Medicare Advantage.
The good news is that Alignment’s business model is all about providing more care, not less, through preventive measures that keep patients healthier, reducing the need for expensive medical treatment.
The bad news is the Trump administration's erratic behavior revolving around tariffs and trade means plenty could happen to knock Alignment and the rest of the health insurers off course.
Assuming the status quo is maintained, Alignment’s enterprise value of $3.53 billion is 1.31x its latest 12-month revenue. While it’s the highest since December 2022, it is still less than UnitedHealth Group (UNH) at 1.43x, and UNH is growing nowhere near as fast as ALHC.
It’s a tricky time to be making any investment moves. However, if you believe Alignment Healthcare’s business is on the right track, I suggest looking at a long-duration call such as the Dec. 17/2027 $35 strike with a $4.40 ask price.
With a delta of 0.46667, you can double your money by selling before expiration if its share price appreciates by $9.43 (50%).
Up more than that in the first 4.5 months of 2025, it’s more than doable.
