Yes, according to data research darling Kensho, analysis of Dow Jones Industrial Average‘s 30 members over the past decade shows that the Dow stocks have averaged a positive return in March. That is some serious March Madness.
The leader of the Dow’s winning streak is one of our favorites, UnitedHealth Group Inc. (NYSE:UNH). UNH has averaged 4.95% in March for the past decade. That’s a pretty impressive number for a healthcare company.
However, health insurance gains aren’t that surprising these days. The healthcare industry that is the biggest winner in Obamacare (aka Affordable Care Act).
The government is creeping towards a single-payer system, meaning the government pays its Medicare and Medicaid claims (hospital fees, doctors’ visits, prescriptions, etc.) directly to a hospital or medical facility, who then pays it out to the doctors and staff. For these plans, the insurance company acts as the middleman and gets a cut.
On the other side, government mandated transition to electronic records has been good for data management companies but is extremely expensive and is hurting independent, non-profit and church-affiliated hospitals. Doctors are forming larger practices to grow volume and create economies of scale, and large hospital groups are actively looking for smaller hospitals that can’t afford to modernize.
Healthcare companies are now becoming quasi-governmental enterprises since many rely heavily on servicing Medicare and Medicaid patients. The better the health insurance companies supply services to the customers, the more they get paid by the government.
Given the demographics of the U.S., this trend is going to continue for quite a while. Granted, now there is a great deal of transition, but in the end, it only makes sense if businesses can get out of providing insurance — just like they got out of providing pensions — and allow the market and government to sort it out.
Just look at the industry numbers in the past year: The industry average cash flow growth rate for Q4 2014 was up 104% year over year.
UNH is a great play here. UnitedHealth is the largest healthcare company in the U.S. and serves more than 85 million people in 50 states in the US. UNH’s international footprint extends to more than 125 countries around the world, and it’s Q4 cash flow was up 127% year over year.
Two of UnitedHealth’s fastest growing segments are its ACA-focused groups providing Community and State solutions. UNH is also seeing healthy growth in its prescription insurance business.
UNH stock is currently near its 52-week highs, but there’s not much to impede UnitedHealth’s momentum at this point.
When markets get confusing, consolidation helps to clarify things, and while things shake out, bigger is better. That’s where we are now in the national healthcare debate, and as long as there is no clear path, UNH will continue to gain ground as the biggest and safest alternative for governments and corporations.
By the way, if you missed getting in on the basketball action or don’t fancy yourself a hoops fan, try your fortune (metaphorically speaking) in our version of March Madness. We’ve selected stocks instead of teams that will go head to head over the coming weeks until we get to our champion. Come check it out here.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family 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.
