Now that half the year has gone by, the nation's focus has turned to several major market moving issues that are either being addressed, or waiting to be addressed. Those of us who are either retired now or close to being retired are keenly aware of the key issues that WILL move the markets, in one way or another.
The Market Moving Issues We Face Now
- The Supreme Court decision on the "Affordable Care Act"
- The Presidential election
- The expiration of the "Bush" tax cuts on 12/31/2012
I have placed them in order of their dates of decisions that could impact our retirement or planned retirement. Let's take a look at each (in separate articles, of course) and their relationship to our investing strategies.
First on the docket that we will look at in THIS article, is the Affordable Care Act.
The Supreme Court And "ObamaCare"
Perhaps the most confusing issue this nation has ever faced is whether or not a law passed by our own Congress is actually constitutionally legal, or not.
Nothing spells out the various scenarios of the Supreme Court decision more than this amazing article which has various responses (accidentally released before the decision, so we do not know anything yet) to each scenario that could be faced by the Court's decision.
Here is the first one:
"Well, the Supreme Court has done what none of us really thought could happen. They've ruled Obamacare constitutional. Now, the fight has moved from the courts to the United States Congress. You can be sure starting January of 2013, if Republicans control the House and the Senate, we will be voting to repeal Obamacare once and for all. Congressman Joe Donnelly voted for Obamacare because he thought big government was the right answer. I'm Richard Mourdock and I'm running for the United States Senate because I know that's the wrong answer and the wrong approach. If you'd like to help us repeal Obamacare, please go to our website, RichardMourdock.com and help us with a contribution. The fight is not over. It will continue, but we need your help to make the fight victorious on behalf of small government."
Then there is this one:
"We now know that Obamacare came down as a split decision. The Supreme Court struck down part, but not all of the health care bill. You can bet the Democrats are gonna fight to try to bring it back and those of us who are conservative are gonna fight for the Constitution and for the private sector. Barack Obama and Congressman Joe Donnelly are going to try to have big government make health care even more expensive. That may not be their intention, but that is what will happen, just as health care costs had already begun to rise under Obamacare, it will only continue to do so if they get a chance at Obamacare 2.0. I'm Richard Mourdock and I'm running for the U.S. Senate in part because I believe private-sector solutions are the answer for our health care problems. If you want to learn more and you'd like to make a contribution, please visit us at RichardMourdock.com."
And of course there is this one:
"The United States Supreme Court has done what none of us expected. They found an answer on the health care issue which basically led them to no decision at all, and we're just going to have to wait a while longer. But the fact is, the issue is not going to wait. It is going to be the issue in this November's elections. President Barack Obama and Congressman Joe Donnelly are going to fight like crazy to maintain a big-government health care system that will lead to higher health care costs and to lower personal choice and even the loss of personal options in health care. I'm Richard Mourdock and I'm running for the United States Senate in part because I don't believe the big government programs of Barack Obama and Joe Donnelly are the right answers for our health care problems. If you feel as I do that we need to get government out of health care, that we need more private-sector solutions and more competition, then I urge you to check me out at RichardMourdock.com. See my points of view and please, check our contribution button too, because we need your help as we continue to wage this all-important battle."
Of course this comes from one Senatorial candidate, but there will be so many more spins from every nook and cranny of the political world, that we will likely go crazy before anything else happens.
That being said, how do we profit in the 2 scenarios that I personally see happening: The Supreme Court keeps the law in full, or at the very least, strikes down the individual mandate for compelled coverage and keeps the rest. I simply cannot see the court throwing the whole thing out.
I could be wrong, but that is the way I see things, and if I am correct, how do we, as investors, stand to profit from those scenarios, and what stocks would I want to be looking at right now?
Here are some of my favorites:
Tenet Healthcare (THC): Price: $4.80/share, ESS Rating: Neutral
Deep in debt, this hospital group would gain immediately by having virtually every patient covered by insurance, and each of their hospitals will always get paid. Their balance sheet can begin to look better and with very low expectations could see it's share price over $10.00 rather quickly.
Tenet has been down for so long, it doesn't know what up is, it seems. Between uncollected bills, lawsuits, and terrible public relations, the company and its stock has been mired in the dog house for a long time. ANY good news to help pay the bills could send the stock much higher, in my opinion.
WellPoint, Inc. (WLP): Price: $69.46/share, Dividend Yield: 1.75%, ESS Rating: Bullish
One of the largest managed care insurers already has a very solid business model and with so many more people available to sell insurance to, this stock could easily get back to nearly $90.00/share in a rather short time frame I believe.
Forty million uninsured people will need to find an insurance company or be "fined" by the government, and WellPoint is positioned with many affordable health insurance options, as well as being wired into the Medicare and Medicaid systems. It stands to reason that WellPoint stands to gain significantly.
Teva Pharmaceuticals (TEVA): Price: $37.74/share, Dividend Yield: 2.25%, ESS Rating: Bullish
Teva has had its share of problems but when we discuss government mandated healthcare, we have to look at prescription drugs. Teva is the world's largest manufacturer of generic drugs and they stand to profit greatly as the squeeze on costs is placed on all areas of the health care system.
While companies like Pfizer (PFE) and Bristol-Myers (BMY) will see their profits impacted to the downside, Teva could see an enormous increase in profits and revenues as physicians begin prescribing generics to comply with any new cost rules that would be imposed.
I can see this stock jumping over $60.00/share very quickly.
While this article covers the first issue we face, it could be the most important in terms of taking immediate action for our portfolio.
I like all three of these stocks and will be deciding what to buy in the next few days.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TEVA over the next 72 hours.