HCR Day 2: Stock market continues to crash, Millions more die State, National, International, posted by anti-stupid brigade, a resident of the Another Pleasanton neighborhood neighborhood, on Mar 23, 2010 at 11:38 pm
Oh wait, nevermind. The stock market went up another 102 pts today. That's 146 pts since HCR passed. The stock market is at a 17 month high. Why aren't the investors out there listening to the republican party? Don't they watch fox news? Don't they realize we just experience armageddon!!!
Posted by Bowler, a member of the Pleasanton Middle School community, on Mar 24, 2010 at 9:39 am
I think ASB is right -- HCR will not destroy the economy. In fact, several major sectors will prosper, specifically retail pharmacies. Please note the analysis by Peter Cohan, a finance columnist and professor. His resume is too long to list here, but you can get more info on him and read this article in full at DailyFinance: Web Link
Basically, the new health care law means more prescriptions. And more prescriptions are good for at least four companies: CVS Caremark (CVS), Express Scripts (ESRX), Medco Health Solutions (MHS) and Walgreens (WAG).
If you're on the side of profiting from change -- and the health care bill is certainly that -- these investment ideas could be worth looking into.
CVS: The pharmacy's sales have clocked a 26.4% average annual growth rate over the past five years, with revenues for 2009 coming in at $98.7 billion. Net income over the past five years has climbed at an annual average rate of 32.6% to $3.7 billion last year. Its stock rose 32% in the last year and, on Monday, it traded at $35.25. CVS anticipates 10.7% earnings growth and it trades at a P/E of 13.7. Its PEG, is a moderately high 1.26. However, given the boost the company should see in increased prescriptions and refills from the health care law, the shares still look attractive.
Express Scripts: This pharmacy benefit management company has enjoyed a 3.8% average annual sales boost over the last five years, reporting $24.7 billion in sales in 2009. Its net income grew 24% a year during the same period to $827 million. Its stock is up 120% in the last year. On Monday, the shares climbed over $1.00 a share to $102. Even with that boost, Express Scripts's shares still have a reasonable 1.26 PEG ratio (on a P/E of 32.8 with 26.1% earnings growth.) Express Scripts isn't necessarily a bargain, but considering that the growth potential from health care reform hasn't really been built into the stock it still has some nice upside.
Medco Health: Medco operates the nation's largest mail order pharmacy. Its sales have climbed at an 11.1% average annual rate over the past five-years to $59.8 billion and its net income was up 21.6% a year during the same period to $1.3 billion. Its stock rose 71% in the last year to $66.06. At that level, Medco Health's stock is the priciest of my four picks, with a PEG ratio of 1.39 -- on a P/E of 25.3 with 18.2% earnings growth.
Walgreens: If you don't have a CVS in your town, then you probably have a Walgreens. The seemingly ubiquitous drugstore chain (which will be even more ubiquitous once it acquires New York-based chain Duane Reade) has seen sales increase at an 11.1% average annual clip over the past five years, logging $64.8 billion in sales last year. Net income over the past five years has grown at an 8.3% average annual rate, with $2.1 billion in profits last year. Its stock rose 45.5% in the last year to $35.70. With a PEG ratio of 0.92, Walgreens stock is the cheapest of my health care reform winners. Its P/E ratio is a mere 16.4, with 17.9% earnings growth.
Posted by anti-stupid brigade, a resident of the Another Pleasanton neighborhood neighborhood, on Mar 24, 2010 at 9:47 am
This has to be the freudian typo of all time: "most investors are more concerned with bottom lies of their favorite capitalist venture." Yes, I'm sure most investors are concerned about the LIES of their favorite capitalist venture. Brilliant. I remember the same arguments being made in 1993 when Clinton's economic recovery bill was passed by 1 vote in the house...same predictions, increased taxes will sap the economy and lead to the downfall of the country. Instead that bill lead to the largest sustained expansion of the economy in the history of the world. It lead to the deficit shrinking from 8 trillion down to 5.5 trillion. Yeah, that tax increase there really destroyed our country. Or maybe it was the massive TAX CUT for the rich by your pal GW Bush that added over 2 trillion to our nations debt, and coupled with the wars in iraq/afghanistan (2 trillion more) and the economic collapse overseen by you GOP dufuses, we saw the national debt double from 5.5 trillion to 11 trillion. Um, if Rome is in decline you should look no further than your own party...