3 Stocks to Buy for Good Health in May

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While the U.S. economy is slowing somewhat, the foundation under the U.S. market is great. Thanks to all of this central bank pumping, the market still yields more than the bank and Treasury securities.

stocks to buy healthcareSome companies are still growing sales and earnings, despite these economic headwinds, and the three stocks I’m about to recommend are among these winners.

The fact that these three stocks have strong sales and earnings, while the S&P 500 continues to struggle, means that our stocks should lead the overall market this earnings season.

Let’s review these health-related stocks to buy:

Centene Corp (NYSE:CNC)

centene-corp-cnc-stock-185Centene Corp (NYSE:CNC) is a healthcare company that offers programs and services to under-insured and uninsured individuals in the U.S. This includes coverage for Medicaid, Medicare and the Health Insurance Marketplace.

Centene also offers specialty services like behavioral healthcare programs, dental services, in-home health services and vision network services. Centene provides these services to government programs, healthcare organizations, employer groups and individuals.

Centene has been in business for 30 years, but recently, CNC has really taken off. The Affordable Care Act has caused Medicaid enrollment to soar, and Centene has been aggressively expanding into new markets. Centene currently operates in 22 state markets, and it’s looking to increase its footprint in the U.S.

CNC also recently purchased a non-controlling interest in Ribera Salud S.A., a Spanish health management group, which marked its entry into an international market. So, last year Centene’s membership jumped 41% to 4.1 million managed care members.

Centene just reported that earnings grew 79.3% year over year, while sales increased 42% year over year in the first quarter. CNC posted earnings of 52 cents per share on $4.8 billion in sales, up from earnings of 29 cents per share and sales of $3.4 billion in Q1 2013. This beat the consensus estimate for earnings of 48 cents per share and just missed estimates for $5.12 billion in sales.

Centene noted that the increase in revenues was thanks to new programs and expansions in several of their states, particularly Illinois, Ohio and Florida. During the first quarter, the company served 331,800 Medicaid members and boosted managed care membership by 44% to 4.4 million.

For 2015, CNC expects sales between $20.5 billion and $21 billion and earnings per share between $2.60 and $2.72. This is relatively in line with the current consensus estimate for earnings of $2.63 per share on $21.89 billion in sales.

I recommend you add this conservative stock.

AmerisourceBergen Corp. (NYSE:ABC)

AmerisourceBergen (NYSE:ABC)AmerisourceBergen Corp. (NYSE:ABC) benefits from U.S. healthcare reform. As one of the world’s largest pharmaceutical services companies, ABC helps drug makers and healthcare providers cut costs.

AmerisourceBergen is so good at what it does that it handles 20% of all pharmaceuticals sold and distributed throughout the country. Yield-seekers may like to know that ABC’s dividend yield is 1%.

On Thursday, AmerisourceBergen posted double-digit sales and earnings growth for the fiscal second quarter. Compared with Q2 2014, revenue jumped 14.8% to $32.67 billion.

Analysts were looking for $32.35 billion in revenue. So, AmerisourceBergen posted a modest sales surprise. Meanwhile, AmerisourceBergen posted a second-quarter loss of $513.4 million, or $2.33 per share. However, excluding one-time items, adjusted earnings per share were $1.45. This also beat the $1.19 consensus earnings estimate by 21.8%.

Looking ahead to fiscal year 2015, AmerisourceBergen expects adjusted earnings per share between $4.85 and $4.95, which is higher than its previous forecast of $4.53 to $4.63 EPS. AmerisourceBergen also expects annual revenue growth between 12% and 13%. ABC shares rose after this generally strong report.

AmerisourceBergen has a strong track record of beating expectations, so I wouldn’t be surprised to see it continue to do even better. ABC is a “strong buy.”

Medivation Inc (NASDAQ:MDVN)

Medivation 185Medivation Inc (NASDAQ:MDVN) develops and markets novel therapies to treat serious diseases. Medivation’s main treatment is Xtandi, which treats post-chemotherapy metastic castration-resistant prostate cancer (mCRPC) and has been very successful.

Last quarter, sales of Xtandi jumped 82% in the U.S. and skyrocketed 246% outside of the U.S. Looking ahead to fiscal year 2015, Medivation expects U.S. sales of Xtandi to surge between 54.4% and 65.4%.

MDVN  is currently in several late-phase clinical trials to test the efficacy of Xtandi for multiple stages of prostate cancer and for breast cancer. Over the long run, Medivation aims to build a portfolio of four to six product candidates.

MDVN is also actively seeking partnerships with other drug and medical device developers. I’m looking forward to seeing where Medivation goes with this.

For the current quarter, the consensus earnings estimate is for 28 cents per share on $149.57 million in revenue. Compared with the year ago quarter, this works out to a whopping 255.6% earnings growth and 71.5% sales growth.

I’m keeping a close eye on MDVN in the meantime and will update the Earnings Center after Medivation reports earnings after the close on Thursday, May 7. Just as a reminder, MDVN is an Aggressive stock. So, you should stick with my 60%, 30%, 10% rule with MDVN stock. Keeping that in mind, Medivation is a “strong buy.”

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.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/healthcare-stocks-to-buy-centene-cnc-amerisourcebergen-abc-medivation-mdvn/.

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