|Dow||-139.81 to 16,429.47|
|S&P 500||-18.78 to 1,920.21|
|Nasdaq||-31.05 to 4,352.84|
|10-YR Yield||-0.008 to 2.483%|
|Gold||+$0.10 to $1,289|
|Crude Oil||-$0.81 to $97.47|
You don’t need me to tell you how controversial Obamacare has been.
Scores of new associated costs and fees.
Technological and bureaucratic glitches aplenty.
Millions of Americans added to the insurance rolls.
They all have politicians on both sides of the aisle either up in arms or proclaiming victory all the time.
I recounted what our very own Weiss Ratings research showed is happening to health-care insurance premiums, in part because of Obamacare. And I’ve talked about how health-care inflation is contributing to a broader rise in prices across the economy.
But regardless of whether you love or hate Obamacare as individuals, one trend is abundantly clear for investors: The hospital sector is making bank from it!
Why? First, because it’s dramatically boosting patient traffic. Second, because Uncle Sam is footing the bill for millions more Americans. That means hospitals are seeing more customers, and fewer of those customers are reneging on the bills they rack up.
“It’s dramatically boosting patient traffic, and Uncle Sam is footing the bill for millions more Americans.”
Take a look at today’s online Wall Street Journal, and it’s right there in black and white. The paper notes that:
“A rush of newly insured patients using health services has boosted hospital operators’ fortunes but has racked up costs that insurers didn’t anticipate, corporate filings and interviews with executives show.
“People are getting more back surgeries, seeking maternity care and showing up at emergency rooms more frequently, executives say, boosting income for hospital operators.”
The story goes on to say that hospital operator Tenet Healthcare (THC) saw a 4 percent year-over-year rise in admissions with a 22 percent plunge in those without insurance. Competitor HCA Holdings (HCA)‘s comparable figures were 3.6 percent and -6.6 percent. No wonder EBITDA surged 37 percent at THC, while revenue rose more than 9 percent at HCA.
|People are showing up at emergency rooms more frequently, executives say, boosting income for hospital operators.|
None of this comes as a surprise to my Safe Money Report subscribers. I identified this trend and recommended a separate hospital firm as a potential winner last fall — and they had the chance to bank up to 16.9 percent on a round of their shares. Now, I’ve just recommended a fresh pick in the sector — and my indicators suggest it could be a major, major winner over time.
To get my precise “Buy” and “Sell” signals, and the name of this latest pick, feel free to give Safe Money a try by clicking here. Or just call my customer service staff at 800-291-8545.
Meanwhile, I’m curious if you’ve profited from the rollout of Obamacare — by owning hospital stocks or other health-care firms. Any that you’d like to share with your fellow investors?
What about the ongoing rise in premiums that the program appears to be driving? How are they impacting you? My sense is that we’re stuck with them as Americans, so we might as well try to profit from them as investors! Do you agree? Let me know at the Money and Markets comments section here.
|OUR READERS SPEAK|
Yesterday’s piece on “Uncle Warren” Buffett and what he’s doing with his cash sparked a great discussion at the website. Topics included what it does (or doesn’t!) mean, and about how much cash you and your fellow individual investors are holding.
Reader H.C.B. said: “Investors would be better served by investing in Berkshire Hathaway rather than trying to second guess Warren Buffett. He is not going to go public until he has made his trade, so you are not likely to profit on short term trends. Just do like he does and buy quality for the long haul.
“The fact a wide range of investors hold lots of cash today is a reflection of a lack of confidence in the market, the economy, The Fed, and the federal government. Market confidence still has not returned to the levels it was previously at in 2007 and it may not for some time to come. Historically low daily volumes on the NYSE attest to this fact.”
Reader Rob U. was also skeptical of how much value the broad market offers here, saying: “By all measures the stock market is overvalued. Shiller CAPE, market cap to GDP. Corporate profits are at record highs, margin debt is again at record highs, and it’s been five years and we’ve had neither a bear market nor a recession. I would hold no less than 20 percent cash.”
On the other hand, Reader John said Buffett’s high cash level doesn’t signal anything concerning. His take: “It’s no surprise that Warren Buffett is holding cash. He ALWAYS holds cash — money that comes in as profits from the various companies he owns entirely is where it comes from.
“So it’s not at all unusual for Buffett to have a huge pile of cash on hand, and it’s nothing to worry about per se. He does it all the time while looking around for the next good buy. And you probably should too until you’re ready to make a wise investment selection. Why would you do otherwise?
“When Buffett buys a company ‘lock stock and barrel’ he does so specifically to get the cash flow the company generates. In effect he takes a 100 percent dividend from them rather than whatever small percent of profits the CEO decides to share with stockholders.”
Meanwhile, Reader Kathryn H. had an interesting tip for determining the REAL state of the job market. Her view: “One sure way to estimate the real unemployment rate, especially among those with graduate degrees, is just to look at how high LinkedIn is. The more it goes up, the higher the unemployment is among this group of people, regardless of the discipline.”
Great stuff! Feel free to share your thoughts on the job market or your personal “economic indicators” here.
|OTHER DEVELOPMENTS OF THE DAY|
We got more powerful data suggesting my long-standing story of an economic recovery is dead on target! Factory orders rose 1.1 percent in June, more than double the 0.5 percent estimate. Plus, the ISM Services index rose to 58.7 in July from 56 in June. Not only did that beat forecasts, but it was also the highest reading going all the way back to 2005!
I have a bunch of trips coming up, for both business and pleasure. And boy, do I know how this story on higher ticket prices is true! It notes the average domestic, roundtrip ticket price just hit a record $509.15, including taxes.
That’s up $14 from a year earlier. Hotel costs once you get to your destination are up 4 percent from a year earlier, too. Of course, these increases must all be imaginary because the Fed says there’s no inflation. Haha!
Interesting move in the media space by Gannett Co. (GCI, Weiss Ratings: A-). The company publishes USA Today and several other newspapers, and owns TV stations around the country. It’s going to split up its online and offline businesses to try to unlock value for shareholders, following similar moves from the likes of Time Warner (TWX, Weiss Ratings: A).
What is Russian President Vladimir Putin planning? No one knows for sure. But according to the New York Times, he’s building up one hell of a war-making arsenal close to the Ukrainian border. Specifically, the Times notes …
“Over the past several weeks, Russia has built up 17 battalions — totaling 19,000 to 21,000 troops, according to one Western estimate — into a battle-ready force of infantry, armor, artillery and air defense within a few miles of the border. In addition, it has vastly expanded its firepower, increasing the number of advanced surface-to-air missile units to 14 from eight, and deploying more than 30 artillery batteries, according to the officials.”
A midday stock market swoon, related to rumors of a Putin invasion of Ukraine, showed that investors are still focused closely on potential chaos in eastern Europe.
The second Ebola patient has arrived in the U.S. from Africa. She will be treated at the same specially equipped Atlanta hospital as the previous patient. Both were medical missionaries overseas.
Any thoughts on treating Ebola patients in America, by the way? Share them.
Reminder: You can let me know what you think by putting your comments here.
Until next time,