HCA Holdings (HCA) — It’s been a long time since I reviewed this health care stock. In fact, it was on Dec. 7, 2012, when shares were trading near $33.50. As one of the nation’s largest health care service providers, I expected HCA to benefit from the reelection of President Obama and the Affordable Care Act.
Even though Obamacare has been challenged since then, and continues to be, HCA’s excellent management supports higher prices. The stock is a great example of why investors should buy good quality, well-managed companies — and hold on to them. Readers who took my advice to buy HCA as a “cornerstone holding in the health care industry” are sitting on 85% gains.
S&P estimates earnings per share will increase to $4.15 in 2014, up from $3.37 in 2013, due to “superior economies of scale and improving admission trends.” Its analysts raised their 12-month price target by $10 to $68 on July 16, following upwardly revised 2014 guidance by management.
That announcement resulted in a breakout from the gradual bull channel that began in January, and a bullish flag breakout on very high volume. The breakouts were supported by a strong MACD buy signal. The trading target for HCA is $70, but long-term investors could achieve much higher returns by holding.