The Long Case For Lincare Holdings

Eddy Elfenbein submits: Since the beginning of 2006, the market value of the S&P 500 has increased by $2 trillion, but the health care sector has been warming the bench. Health care has chipped in just $66 billion, or about 3.3%, which is well below its sector weighting of 12%. Fortunately, lagging sectors are often good places to spot bargains.

One mid-cap health care stock that I’ve got on my radar is Clearwater, FL-based Lincare Holdings (LNCR). Lincare is in the oxygen and respiratory therapy biz. You may have seen their portable oxygen tanks which, in Florida, are sorta like iPods for the retiree set.

I’m not claiming to have any special insight here. I’ve just run the numbers on LNCR and it looks like a good stock at a good price. The shares are currently going for 13.6 times next year’s estimate, which is about a 13% discount to the market. EPS jumped 24% last quarter and is expected to rise 16% this year.

I don’t own it, but in a market where Yahoo (YHOO) can fetch $27, Lincare at $39 ain’t bad.

LNCR 1-yr chart:

Disclosure: Author has no position in LNCR.

Comments

[tut666:]

REimbursement here is ripe for change i.e much lower. They are marking up oxygen to ridiculous levels and taking advantage of govt.

2007 Jun 14 12:04 PM

[jvillwock:]

All depends on what CMS does with reimbursement -- and how they allow drug reformulation. Should hear about this any day now.

2007 Jun 14 01:00 PM