As the health care industry strives to reduce costs and boost efficiency, one thing is certain: Paper-based systems and records soon will go the way of iron lungs and leech therapy. And some of the biggest stock winners in that paradigm shift will be companies that specialize in health care information technology (HIT).

Of course, technology evangelists have been predicting the coming HIT boom for more than a decade now. So how can investors be sure that stocks in this sector are poised to perform? To quote Watergate’s “Deep Throat”: Follow the money.

The Obama administration’s health care reform plan included $36 billion in stimulus money to help health care payers and providers build out a computerized infrastructure. But to that carrot, Congress added a big stick: tough new regulations and tight deadlines with which to meet them.

Last year, health providers like hospitals, physicians and others spent almost $89 billion to develop and implement electronic medical records, health information exchanges, and other HIT initiatives, according to PwC Health Industries. And spending is expected to grow further during the next five years.

But even in a burgeoning market like HIT, some companies are better positioned for growth.  Here are four winning HIT stocks for the coming boom:

1. Cerner (NASDAQ: CERN). At $61.86, Cerner is trading nearly 72% over its 52-week low of $36.03 last July. The stock has a decent price-to-earnings growth (PEG) ratio of 1.79 and analysts estimate earnings growth of about 22% this quarter. With a market cap of $10.4 billion, the company has nearly $611 million in cash compared to debt of just $101.4 million – a total debt/equity of 3.8. The Edge: The company this week announced an electronic medical records alliance with the UPMC health network and Oracle.
2. Allscripts Healthcare (NASDAQ: MDRX). At $19.51, Allscripts is trading more than 24% over its 52-week low of $17.51 last July. The stock has an attractive 0.9 PEG ratio – an indication that the stock might be undervalued. Analysts estimate earnings growth of about 17% this quarter. With a market cap of $3.7 billion, Allscripts has $145.4 million in cash and debt of $449.4 million, for a total debt/equity of 31.5 – on the higher side of the sector.  The Edge: The company just launched a cloud-based HIT solution for physician practices.
3. Athenahealth (NASDAQ: ATHN). At $41.76, athenahealth is trading more than 94% over its 52-week low of $21.51 last August. The stock has a solid PEG ratio of 1.5, and analysts estimate earnings growth of 50% this quarter. With a market cap of $1.46 billion, the company has $102.7 million in cash compared to debt of only $8.9 million, for a total debt/equity of 4.9. The Edge: The company on Friday announced an EMR deal with the state of Wisconsin’s WHITEC health information exchange.
4. Computer Programs & Systems (NASDAQ: CPSI). At $64.18, CPSI is trading more than 66% above its 52-week low of $38.60 last July. Unlike most companies in this sector, it pays a dividend – a 2.3% yield.  The stock has a PEG ratio of 1.46, and analysts estimate earnings growth of 41% this quarter. With a market cap of $710 million, CPSI has total cash of $26.4 million, but no debt.  The Edge: CPSI is teaming with a Vermont hospital system to develop an EMR platform.

As of this writing, Susan J. Aluise did not hold a position in any of the stocks mentioned here.