In a previous article I mentioned how health care IT provider Cerner (NASDAQ:CERN) sits at the intersection of two important sectors — health care and technology — making it a game-changing company worthy of a spot in your portfolio. Keeping with the same theme, my three stocks to buy for January also are from these growing sectors — health care and technology. If you’re new to investing and wondering which stocks to buy first or if you’re just looking to put your money to work, these three stocks are attractive buys right now:
IPC The Hospitalist Company (NASDAQ:IPCM), like Cerner, should be able to realize solid earnings growth in 2012 regardless of what happens in the economy. IPCM provides hospital-based primary care physician services — a rapidly growing medical specialty over the past decade. Impressive revenue growth averaged 27% per year from 2005 to 2010, driven largely by the company’s acquisitions. Particularly heavy acquisition activity pressured margins in the third quarter, but I’m looking for them to bounce back strongly in 2012 because of the company’s history of successful consolidation.
Also, there still is plenty of room for IPC to grow, as there are more than 30,000 hospitalists in the United States and only 1,100 of them are affiliated with IPCM.
ICU Medical (NASDAQ:ICUI) is another consistent stock that should be able to grow earnings in almost any conditions in 2012. A maker of IV devices, ICUI has been on a nice run, gaining 20% during the past three months. This company produces several innovative devices, such as its click lock catheters, and new products scheduled to be released this year should continue to be significant growth drivers.
ICUI also is an attractive acquisition candidate in a medical device industry that could be consolidating in the future. Adding to the stock’s attraction is strong valuation, debt-free balance sheet and $8.60 a share in cash.
EMC (NYSE:EMC) has been held back in recent months by a fear of lower enterprise IT spending in 2012, especially for cloud-related services. I do think the tech sector could see some bumpy earnings early in this new year, but with the stock selling for just more than 12 times expected 2012 earnings of $1.71, the market already appears to be pricing in considerable skepticism for the year. However, I see corporations continuing to make significant investments in cloud computing in 2012 for the cost savings the cloud provides. Even in a more difficult IT environment, I believe EMC will be able to achieve its “Triple Play” goal of gaining market share, investing in cloud computing and improving profitability.
Earnings growth is likely to pull back from the very healthy 23% achieved in the third quarter, but growth still should be solid in 2012, which I expect will lead to a nice bounce in the stock. In addition, while EMC is a large company with a market capitalization in excess of $40 billion, it could be an acquisition target for another large-cap tech company seeking to bolster its presence in the cloud. A buyout would likely bring us nice profits, and the possibility also provides some downside protection in the event of a downturn in corporate IT spending.