eHealth: The Road to Recovery

With the economy the way it is, it's hard to find any company that is even somewhat sheltered from being beaten down. There is one company, however, that is defying the market's gravitational pull.

eHealth Inc. (EHTH) is an internet based health insurance provider for families and small businesses. Their headquarters are based in Mountain View, CA, the same city as Google (GOOG), and were established in 1997. Despite the downturn, they have doubled the number of policies from nearly 500,000 in 2007 to presently over 1,000,000. The potential for US subscribers is much larger still.

They also have a partnership with Alltrust Insurance Agency Co. in China that gives them access to the extremely vast and developing market for health insurance in China. Having a foothold in China gives eHealth the opportunity to grow many times its current size.

eHealth's financial condition is outstanding. They maintain a profit margin of 31% and have very minimal liabilities. With no long-term or short-term debt, the only significant liabilities eHealth carries are Accounts Payable. Their year-over-year quarterly revenue growth is at 24%. The stock price has a PE of 10x, which is low for such a high growth company.

I believe eHealth is one of those rare, undiscovered great companies that will skyrocket when investors realize the value in it. This stock has a market cap of less than $350 million and about 25 million shares outstanding. If you asked William O'Neil, founder of Investor's Business Daily, he would say that this is the type of stock that will generate returns into the 1000%'s over time because it fits his time-tested, but strict investing formula.

Although the "buy and hold" stock investing strategy hasn't been working in this wild-swing market, eHealth's stock has the potential to yield huge returns if you hold it for 3 to 5 years.

Disclosure: no positions

Comments

[TripleG:]

eHealth is almost a scam company. They provide a very few options and when you contact those companies, they only insure very young and low-risk persons with no medical history of any kind. Once people start using this site they will sour on it quickly. Assurant sells short term insurance here but you have to apply for the long term insurance before they will sell you the short term.

Jan 02 08:00 AM

[Dan Jacome:]

they could get killed if Obama gets his national health insurance exchange up and running, altho its unlikely...

Jan 02 09:12 AM

[YoYoMama:]

Triple G -

eHealth can only offer what insurance companies are willing to provide. Unless you have a group health plan from a large company, ALL insurance companies offering personal insurance will screen out ANY health conditions and refuse to cover you. This is not a stipulation of eHealth, this is how insurance companies work.

I run a website which assists persons attempting to locate personal health insurance, please see link.

Jan 02 10:04 AM

[Jared Schne...:]

I believe that the health insurance industry lobby in Washington is strong enough that if Obama passes a healthcare affordability plan, the government would have to subsidize the premiums.

They could not force the health insurance industry out of business, but depending on what kind of health plan comes out, insurance co.'s margins could get squeezed.

I still believe that eHealth has a lot of potential for growth. Thanks for the comments!

Jan 02 02:37 PM

[User 331075:]

eHealth will become a great company in future！I believe it.

Jan 05 02:47 AM