A healthy HMO

If Obama's heath care reform doesn't take the profit motive out of healthcare, Health Net might be a stock to buy.

By Jim Van Meerten Nov 23, 2009 9:44AM
Doctor © Adam Gault / Digital Vision / Getty Images Last month, the sector that had the best overall price appreciation was the medical and HMO sector, with an average price increase of 38%. A very good return, considering the market as measured by the S&P 500 was up only about 1.15%.

The member of the sector with the highest BarChart rating was  Health Net (HNT), with an 96% buy rating.

What I found interesting about the sector was that although the sector as a whole had great price appreciation, HNT was the only standout in BarCharts technical indicators.

There are six analysts closely following this stock, and five have upped their earning per share estimate in the last 30 days.

My personal view is that the investing public is like a deer in the headlights about the whole health care industry. Many are worried that the Obama's administration programs will take the profits from this industry and make anything related to health care either government price controlled or, even worse, a nonprofit.

I think those fears are unfounded. Even countries with socialized medicine have a great need for private health care insurance and private hospitals. Those with large disposable incomes will always get great health care, housing and education for their families.

Back to BarCharts rating of HNT. The stock has 12 out of 13 technical indicators signaling buy with just one hold. The stock has hit 9 new highs in the last 20 trading sessions and is just 1.28% off its 260 day high just hit recently on 11/18/2009.

As always I like to see what other sites rate the stock and over on Wall Street Survivor, Mark's checklist has a 5/5 Survivor Sentiment with 4/5 on the fundamentals and 5/5 on his technical rating. Motley Fool CAPS members vote 102 to 24 that the stock will out perform the market and their All Star members vote 49 to 9 on out performance also.

I like the stock but can't add it to my Top Stocks portfolio because I'm fully invested at this time and can't see selling something just because I may have found something better. If you have some money to invest, this might be a good play for your health care position.

Jim Van Meerten is an investor who writes about financial matters here and on Financial Tides. Please leave a comment below or e-mail FinancialTides@gmail.com

Disclosure: I did not hold a position in HNT at the time of publication.
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