There's Plenty More Upside in This Boondoggle
By Rob Fannon
March 27, 2009
Last November, my colleague George Huang showed you how to collect 30% gains in a year in some of the world's best medical businesses.
He was talking about the health care IT sector... These companies are helping America's old-fashioned hospitals and medical centers switch from piles of manila folders to streamlined computer systems.
As George pointed out, Obama had pledged $50 billion to help the transition. For a $10 billion industry, that's quite a boost. But at the time, no one was paying attention. Investors were focused on Obama's "green" initiatives and piled into solar stocks and wind-energy producers...
Well, the green energy ETF (PBW) is down about 12% since then, along with the S&P. But health care IT is up about 11%. Take a look...
Company |
2008 Revenue |
Market Cap |
Return Since November |
McKesson (MCK) |
$2.8 bil |
$10 bil |
-2% |
Cerner (CERN) |
$1.7 bil |
$3.7 bil |
21% |
Eclipsys (ECLP) |
$516 mil |
$560 mil |
-28% |
Quality Sys (QSII) |
$230 mil |
$1.3 bil |
21% |
Allscripts (MDRX) |
$680 mil |
$1.6 bil |
50% |
Athenahealth (ATHN) |
$140 mil |
$840 mil |
-4% |
HMS Holdings (HMSY) |
$184 mil |
$780 mil |
22% |
|
George's prediction is right on track. And I think the trend is just getting started...
Despite consuming the largest chunk of our economy (20% of GDP), health care is one of the least automated industries.
Every grocery store in America uses inventory software to keep track of each bottle of soda and box of Cheerios. But only 20% of U.S. hospitals use it to keep tabs of their codeine and syringes. Banks, credit-card companies, and stock brokerages let their customers handle sensitive transactions over the Internet. Heck, even the IRS lets you file your taxes online. But doctors and hospitals still store medical charts in stacks upon stacks of filing cabinets.
It's a joke. Actually, it's worse than a joke, it's an outrage...
Every year, 100,000 patients die from medical errors. That's more than car accidents, breast cancer, and AIDS-related deaths – combined. Adopting modern recordkeeping could save untold numbers of lives every year.
This technology lag is part of the reason the U.S. health care market is so bloated. Up to 30% of medical dollars are wasted on administrative drivel. That's $600 billion. Even so, doctors and hospitals have been unwilling to cough up the costs of upgrading their IT. And that's where President Obama comes in...
On the campaign trail, Obama promised to rein in health care costs. And he's betting an overhaul of the nation's health care IT is the best place to start.
Naturally, he's tackling the issue by throwing heaps of taxpayer money at it. Obama has dedicated $20 billion of the $800 billion stimulus package to subsidize IT upgrades. And that's just a down payment on his $50 billion campaign promise.
Thanks to the Obama administration's bottomless checkbook, I believe we're going to see a huge wave of money heading into the stocks I listed above. And I'm confident we're at the very beginning of this trend...
Good investing,
Rob
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| • |
Tech stocks lead the market... Technology fund XLK approaches three-month highs. |
| • |
BestBuy skyrockets... Better-than-expected earnings boost shares 13%. |
| • |
Mortgage rates lowest ever recorded... 30-year fixed rates hit 4.85%, is it time to refinance? |
| • |
Earnings today... Finish Line, KB Home, Humboldt Wedag. |
|
Last |
Change |
52-Wk |
| S&P 500 |
832.86 |
+2.33% |
-37.90% |
| Oil (USO) |
31.94 |
+2.34% |
-62.34% |
| Gold (GLD) |
91.91 |
-0.08% |
-2.01% |
| Silver (SLV) |
13.36 |
+0.07% |
-26.69% |
| U.S. Dollar |
83.69 |
-0.53% |
+15.91% |
| Euro |
1.35 |
-0.56% |
-14.76% |
| VIX |
40.33 |
-4.54% |
+54.64% |
| HUI |
335.61 |
+0.42% |
-26.92% |
| 10-Year Yield |
2.73% |
-0.04 |
-0.59 |
|
| Company |
Sym |
Industry |
Computer Prog & Sys |
CPSI |
tech |
ImmunoGen |
IMGN |
biotech |
Pegasystems |
PEGA |
software |
Neutral Tandem |
TNDM |
telecom |
ClickSoftware |
CKSW |
software |
Hallador Petroleum |
HPCO |
coal |
Optimer Pharma |
OPTR |
biotech |
Theravance |
THRX |
biotech |
AutoZone |
AZO |
auto parts |
Hot Topic |
HOTT |
retail |
Ocwen Financial |
OCN |
mortgages |
Intl Tower Hill |
THM |
mining |
APAC Cust Svcs |
APAC |
customer care |
Family Dollar |
FDO |
dollar stores |
Longtop Financial |
LFT |
bank software |
Scotts |
SMG |
fertilizer |
AsiaInfo Holdings |
ASIA |
software |
HH Gregg |
HGG |
retail |
Myriad Genetics |
MYGN |
diagnostics |
SXC Health |
SXCI |
med software |
Amer Italian Pasta |
AIPC |
pasta |
Eldorado Gold |
EGO |
mining |
KongZhong |
KONG |
cell phone media |
Santa Fe Gold |
SFEG |
gold |
Darden Restaurants |
DRI |
restaurants |
Kirkland's |
KIRK |
retail |
Rohm & Haas |
ROH |
chemicals |
TeleComm Systems |
TSYS |
telecom |
|
|
| Company |
Sym |
Industry |
Dussault Apparel |
DUSS |
clothing |
|
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