Dividends and A surprising recovery for health stocks

At some point in time, what is known as Obamacare will be repealed and replaced by something else, if you believe President Trump it will be done in one day. If it is replaced the theory is the private sector will jump in and compete for the business. Why they would want to fight over the people who can not afford to pay higher rates for preconditions of their health and those who generally cost the system more than they pay is something the minds in Washington seem to know. Many insurers might look at the market and then want government guarantees so the bills get paid, but we will see when the change is made. In the meantime what is the outlook for heath stocks?

Peter Aston of Recognia looked at health stocks in early February. He set up the criteria of:

minimum market capitalization of $2.5 billion    (stock price times number of shares outstanding)

companies that make money demonstrated by their projected earnings per share  (EPS)growth and their return on equity (ROE)  -looking for forward EPS growth rate of 10% or more and at ROE of at least 10%

part of the idea is to have a capital gain so you do not want to pay too much and the forward Price Earnings (PE) ratio is 22 or less

Company                                  Mkt Cap           Fwd P/E      ROE      EPS Growth        Dividend

in $ Bil                Ratio                          Projected            Yield

Centene Corp                        30.8                    14.5               18.3%         43.2%                0

Express Scripts                    42.5                     10.6               13.2             15.5                    0

HealthSouth                            3.5                    15.5                31.1               14.3                   2.5

UnitedHealth Group          154.3                  20.4                20.0             18.2                   2.0

Laboratory Corp                    13.8                   15.4                11.3                11.1                   0.0

Humana                                  29.6                   21.2                12.8               23.0                   0.6

INC Research Holdings         2.8                    21.6              38.4               24.9                   0.0


Linking to dividend paying stocks, there will be and is many opportunities in the health care field as the baby boom population ages. People over 65 as their bodies need more care need more health care and soon the biggest group of people will be the over 65 years. As you determine, try to use the research to find the best company for your needs. Mr. Ashton picked criteria that may or may not eliminated your company, by changing the criteria you can see what you have and consider alternatives.

There are more questions than answers, till the next time – to raising questions.


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