Where to Find the Best Hidden Health Care Investments
By Rob Fannon, editor, The Medical Investor
March 16, 2007
It's no secret that Americans spend a fortune on health care… about 16 cents of every dollar made, in fact.
Last year alone, we spent $2.1 trillion on medical expenses.
So, where does all of this money go? Well, as you can imagine, a lot goes to doctors, hospitals, and drug and insurance companies. That's no surprise.
But there is a handful of little-known medical businesses you've probably never heard of, some of which make an absolute fortune for shareholders, year after year.
Contract research organizations (CROs), for example, handle the nitty-gritty of drug trials for Big Pharma. Last year, drugmakers spent $60 billion on research, funneling of 25% to CROs. That number is expected to double in five years' time.
Another out-of-the-way industry, medical devices, sells premium-priced, high-margin products and generates big cash flows. As baby boomers head into an active retirement and as America's waistline expands, medical devices – like drug-coated heart stents, pacemakers, and joint replacements – are going to be more and more in demand.
Actually, the health care industry is hiding a few more of these gems...
- Pharmacy benefit managers (PBMs) are third-party vendors that organize and operate prescription-drug benefits for private employers. For example, a PBM might develop a list of drugs available to employees and negotiate bulk-sales contracts with drug companies on its client's behalf. Of course, in the process, PBMs rake in tons of money.
- The insurance industry is highly fragmented, opaque, and downright messy. Medicaid-only insurance companies, however, make up a highly profitable niche, focusing exclusively on managing government-sponsored medical insurance benefits.
- Drug wholesalers essentially act as middlemen, getting prescription drugs from the point of manufacturing to the patients that need to take them. In my next essay, I'll discuss a company that gets paid every time a drug is dispensed in America's nursing homes.
American consumers are pouring money into the health care sector (remember, we spent $2.1 trillion last year). And with the market's recent volatility, investors are flocking to "defensive" sectors, like health care.
The average investor will do well putting money into the obvious health care plays, companies you might read about in the Wall Street Journal. But superior returns can be found in these behind-the-scene players.
Stay tuned next week for more details...
Good investing,
Rob Fannon
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Thai Oil is Cheap
Crude oil costs the same all over Asia. Oil refiners don't, especially in Thailand.
Investors value PTT Pcl, which owns stakes in most of the country's chemical makers and refiners, at nearly half the price-earnings ratio of the average Asian oil and gas stock. Thai Oil Pcl, the biggest refiner, sells for 30 percent less. Read on...
Wal-Mart Wants to Give Banking a Try
Wal-Mart Stores Inc., underscoring its continuing push into financial services, has quietly renegotiated the terms of leases with a number of banks operating in its stores, giving Wal-Mart itself the explicit right to offer mortgages, home-equity lines of credit and consumer loans.
A portion of one of the leases, obtained by Dow Jones Newswires, also gives Wal-Mart the ability to offer debit cards and investment and insurance products either directly or through a third-party vendor.
In the wording of the new lease, Wal-Mart said it could "offer these products and services in the checkout lanes, at the customer-service desk, through automated-delivery channels, kiosks" or any other place in the store. WSJ ($) Read on...
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Medical-device giants Stryker, Akzo Nobel, and Baxter all at 52-week highs
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Oil pipeline companies continue to lead market: Martin Midstream, Valero LP, Magellan Midstream, Kinder Morgan Energy, and Martin Midstream hit new highs
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In the news: Wal-Mart to sell loans at the checkout counter.
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Last |
Change |
52-Wk |
| S&P 500 |
1392.28 |
0.37% |
6.85% |
| Oil (USO)* |
48.67 |
-0.96% |
-28.26% |
| Gold (GLD) |
63.98 |
0.06% |
16.07% |
| Silver (SLV)* |
129.31 |
1.02% |
-6.38% |
| US Dollar |
83.64 |
-0.02% |
-6.88% |
| Euro |
1.324 |
0.10% |
9.82% |
| VIX |
17.27 |
-4.74% |
60.80% |
| HUI |
320.56 |
0.58% |
6.64% |
| 10-year yield |
4.52% |
0.03 |
-0.17 |
| * Since ETF inception |
|
| Company |
Sym |
Industry |
BE Aerospace |
BEAV |
aerospace |
Pep Boys |
PBY |
auto parts |
Martin Midstream |
MMLP |
oil & gas pipeline |
Akzo Nobel |
AKZOY |
medical equip |
Valero LP |
VLI |
oil & gas pipeline |
Cadbury Schweppes |
CSG |
food products |
Big Lots |
BIG |
discount retailer |
Magellan Midstream |
MMP |
oil & gas pipeline |
Stryker |
SYK |
medical equip |
Ascent Solar Tech |
ASTI |
solar power |
Cambrex |
CBM |
biotech |
Metal Management |
MM |
steel |
Kinder Morgan Energy |
KMP |
oil & gas pipeline |
Universal |
UVV |
tobacco products |
Baxter |
BAX |
medical equip |
Bon-Ton Stores |
BONT |
department store |
Quilmes |
LQU |
beer |
PNC Financial Srvcs |
PNC |
bank |
Intl. Aluminum |
IAL |
aluminum |
Holly Corp |
HOC |
oil |
Enterprise Products |
EPD |
oil |
Quanta Services |
PWR |
contracting |
Unilever |
UL |
consumer prod |
CBOT Holdings |
BOT |
derivative exch |
Fairfax Financial Hold |
FFH |
insurance |
Oneok |
OKE |
utilities |
Phelps Dodge |
PD |
copper |
|
| Company |
Sym |
Industry |
Orleans Homebuilders |
OHB |
homebuilder |
Jefferson Bancshares |
JFBI |
holding company |
W&T Offshore |
WTI |
oil drilling |
Mitsubishi UFJ |
MTU |
bank |
|
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