Stop Sleeping on Hospital Stocks
|By Jordan Chussler
The U.S. spends more on healthcare than any other high-income nation.
And not just more … a lot more.
In fact, Americans pay more than double what residents of comparable countries do.
There are numerous contributing factors — like other nations providing universal healthcare, increasing American mortality rates and 30 million uninsured Americans (a staggering 9.2% of the population).
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But no matter what you think of America's healthcare system, it continues to thrive in both good and bad times.
Some sectors — like energy, consumer staples and healthcare — don't care about inflation. They have inelastic demand and pass costs on to people like you and me, knowing that we have to keep the lights on, put meals on the table and pay for medicine.
Those sectors, and the companies operating within them, provide essential needs to people who will pay whatever they must in order to procure those goods or services.
That’s precisely why I’m shelling out the equivalent of a car payment each month for a bill that showed up after my son’s emergency room visit last fall.
And that’s also why Americans pay the most in the developed world for healthcare and medical services:
- The average ER visit costs Americans $2,200.
- People will always have babies and will always require the services of obstetricians. The average cost of pregnancy, delivery and postpartum care in America is now $18,865.
- And that’s just a drop in the bucket compared to oncology. The average cost for cancer treatment in America now stands at $150,000.
Subsequently, providing care for America’s expectant parents and chronically ill is big business, and the companies offering these services generally make for safe money-investments.
Look no further than HCA Healthcare (HCA), a company that has been providing medical services since 1968.
HCA owns and operates 186 hospitals and 2,000 sites of care, including surgery centers, freestanding emergency rooms, urgent care centers and physician clinics in 21 states and the U.K.
Last month, the Weiss ratings upgraded HCA to a “Buy” based on a major increase in the Total Return Index and Growth Index. Specifically, operating cash flow increased 85.28% from $1.63 billion to $3.02 billion, forcing the ratings’ hand.
The company pays a quarterly dividend of 60 cents per share, and in the past six months, shares have risen over 17%.
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After testing support around $242 on March 1, the stock has bounced nicely. The Wall Street Journal and CNN Money both give HCA a median 12-month price target of $284, representing 12.77% upside potential.
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Until next time,
Weiss Ratings Daily