CNC: Buy Centene Regardless of Obamacare’s Fate

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Obamacare, or the Affordable Care Act (ACA). Some people love it, some hate it and most aren’t quite sure what it’s supposed to do — but if big government is involved, it’s something to be very leery of.

centene-corp-cnc-stock-185The one thing that was certain when this ungainly, over-compromised piece of legislation passed both houses was that healthcare insurance companies would be taken care of. They were the ones with their necks out on this one, and Centene Corp (NYSE:CNC) is a prime example.

But first, some background on how it came to be that of all the players in this healthcare game, insurers ended up some of the biggest winners in Obmacare’s ‘socialized’ medicine.

As is typical of Washington lobbyists and political dealmakers, the compromise struck by Democrats and Republicans made both sides unhappy with the final bill, but it addressed enough of each other’s talking points to merit passage — gotta do something big to get re-elected.

Inside the Beltway, passing these massive bills is always an imperfect art the first time around. The goal is to get something done and then spend the next few election cycles working it out — it helps wring every dollar out of the special interests.

For the opposition party, it blames the result on the party that passed the hot mess and vow to repeal it, rewrite it or smother it in legislative bureaucracy. The party that passed it generally has hamstrung itself in compromises. So, few in that party even support (or recognize) what passed, much less have any interest in leading the charge against the opponents.

And we’re at the ‘Your Are Here’ spot with ACA right now.

There’s a challenge about Obamacare’s constitutionality at the Supreme Court. Republicans are looking for ways to defund Obamacare now that they’re in charge of Congress. Democrats ran away from Obamacare in the last election cycle and have practically vowed not jump out of the way of the hard charging Republicans on their way to eviscerate it.

But for now, the reality is, the Affordable Care Act is the law of the land. Like it or not.

And quite frankly, healthcare insurance companies are loving the Affordable Care Act.

CNC in particular. In the past year, as rhetoric grew about the horrors of Obamacare and the champions of its demise took over both houses of Congress, CNC rose 117%. Remember this is an insurance company that provides customized solutions to states for government sponsored healthcare programs.

Centene is all about providing healthcare for the uninsured and low-income individuals and families using Medicaid and Medicare and other state and federal programs.

Centene has a market cap of $8.25 billion. CNC stock is 96% institutionally owned. Centene has been around for almost 15 years — well before Obamacare was even a talking point. Centene has substance.

And CNC has momentum. CNC has 1% maximum earnings exposure to Federal healthcare exchanges, one of the largest in the industry. Many insiders think the government may win the case in front of the Supreme Court, but even if it doesn’t, the states could set up their own systems with funding from the government accomplishing what the federal government couldn’t.

And if the Congress pulls the plug on Obamacare, there are going to be some seriously upset health insurance companies, which have one of the largest lobbying groups in Washington. Health insurance is not the group to upset in a presidential election year.

So, forget the politics, the trend is your friend. Just bear in mind, 6% of CNC stock is being held short at this point, waiting for the Supreme Court ruling. If the ruling goes against Centene, CNC stock will fall far, fast.

However, if the court rules in favor of Obamacare, the short squeeze will be enormous, and CNC stock could hit triple digits in a very short time.

If you’re risk tolerant, CNC is a solid long-term entry point.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


Article printed from InvestorPlace Media, https://investorplace.com/2015/03/centene-cnc-obamacare-affordable-care-act-aca/.

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