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"My momma told me, 'You better shop around.'" - Smokey Robinson

Shopping around is a foundation of savvy investing. Independent research allows investors to go beyond the stocks featured in the news and shop lesser-known alternatives. As simple as it sounds, you are better off shopping around than using the media as a filter that selects for popular or glamorous stocks.

WebMD Health Corp. (WBMD) has attracted attention as a potential bargain since its recent 25% drop. The shares plummeted when the CEO abruptly resigned and the firm (at least temporarily) halted the search for an acquiring firm. The firm's current pharmaceutical-advertising business model is under scrutiny as many of its sponsors are cutting costs. Despite all the drama, Carl Icahn recently added to his holdings.

Regardless of the drama, intelligent investors should consider alternatives to WebMD as attractive growth investments. Instead of WBMD, consider the following stocks which offer better investment prospects:

Ticker

Company

Industry

P/E

Altman Z-score

(BPI)

Bridgepoint Education, Inc.

Education & Training Services

8.59

7.71

(EBIX)

Ebix Inc.

Business Software & Services

13.62

8.35

(MED)

Medifast Inc.

Specialty Retail, Other

10.94

9.76

(RBCN)

Rubicon Technology, Inc.

Semiconductor - Specialized

5.28

7.88

WBMD

WebMD Health Corp.

Healthcare Information Services

20.68

-4.90

Each of these alternatives is cheaper on a price-to-earnings basis and has a better ("safe") Altman Z-score, a metric that categorizes firms based on the probability of bankruptcy.*

Moreover, BPI, EBIX, MED, and RBCN have experienced higher earnings growth, higher sales growth, and analysts expect them to grow earnings more than WebMD over the next five years:

Ticker

EPS Growth Past 5 Yrs

EPS Growth Next 5 Yrs

Sales Growth Past 5 Yrs

BPI

67.2%

21.7%

145.8%

EBIX

58.0%

15.0%

40.6%

MED

52.1%

17.5%

45.0%

RBCN

89.1%

17.3%

36.5%

WBMD

46.5%

12.0%

26.7%

It is clear that BPI, EBIX, MED, and RBCN have more promising investment metrics than without the glamor and drama. Invest in them rather than WBMD, and read a book or watch a movie for your drama fix.

Disclaimer: This research is NOT a guarantee. This article uses third-party data and may contain approximations and errors. Please check estimates and data for yourself before investing.

This article was written to provide investor information and education, and should not be construed as a guarantee or investment advice. I have no idea what your individual risk, time-horizon, and tax circumstances are: please seek the personal advice of a financial planner.

*The Altman Z-Score is a measure of bankruptcy risk that is not based on stock price volatility. This score places companies into three groups: "safe" (Z-score > 2.99), "grey" (Z-score between 2.99 and 1.81), and "distressed" (Z-score < 1.81), and is surprisingly useful for identifying bankruptcy risk in the coming year. This method of segmenting companies uses of fundamental (financial statement) data and market capitalization only, not on price volatility. Beyond credit risk prediction, companies with higher Z-scores have historically outperformed companies with lower Z-scores, in aggregate. One sector has not been accurately modeled: Altman's Z-score has not accurately predicted the bankruptcy risk of financial companies.

"Distressed" was a label coined by researchers, and should not be taken to mean that any company is bankrupt or in default on the basis of this calculation alone. Credit scoring is not fate, only prediction based on relative past performance of companies grouped by key variables. Time will tell.

Source: 4 Stocks To Outperform WebMD